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Cryptocurrency craze wins over Harry Redknapp – but gets red card from others | Nils Pratley

Harry Redknapp
Harry Redknapp is supporting ‘the first British cryptocurrency’. Photograph: David Davies/PA

The trouble with these cryptocurrencies is that expert opinion is so divided. In the sceptical camp, you have the likes of Kenneth Rogoff, the former chief economist of the International Monetary Fund; Jamie Dimon, the chief executive of one of the world’s largest banks, JP Morgan; and our own Financial Conduct Authority. In the other camp, there’s Harry Redknapp.

Yes, the football manager who recently departed Birmingham City is the latest celebrity to join the craze. “Proper excited about Mobile Cryptocurrency! I’m in, get involved!” tweeted Redknapp in support of Electroneum, which bills itself as “the first British cryptocurrency.”

Redknapp is free to speculate as he wishes, but the advice here remains the same: if you find yourself tempted to have a flutter on a cryptocurrency, lie down until the feeling goes away.

The second paragraph of Electroneum’s own announcement of its initial coin offering, or ICO, provides one reason to be cautious. Cryptocurrencies used to be a minority sport, it observes, but, after the surge in bitcoin’s value, “every tech-savvy entrepreneur and currency speculator” wants a piece of action.

Well, quite. There is a danger that late arrivals will be joining a party that is already old, which was the gist of Dimon’s comparison of the bitcoin phenomenon with Dutch tulip mania in the 1630s.

Another observation was echoed by Rogoff, who argued: “It is folly to think that bitcoin will ever be allowed to supplant central-bank-issued money.” That must be correct: governments like to control their financial systems.

It is, of course, possible that the craze can become wilder still – bitcoin hit a new high on Thursday. But last month’s warning by the spoilsports at FCA was sober and correct: “be prepared to lose your entire stake” and remember that most ICOs are unregulated. So, no post-match grumbling about the referee, please, because there isn’t one.

Low-powered arguments

Contain your excitement: a full price cap on energy bills is coming. Most people’s enthusiasm, one suspects, will be determined by whether they’re on a standard variable tariff or have switched to a fixed cut-price deal. The former group should enjoy a saving, although maybe not the full £100 per household per year advertised by Theresa May. Active switchers, on the other hand, may find they will pay more when their current deals expire. What should be easier to agree on, however, is that this policy is riddled with breezy assertions and lazy assumptions.

The first problem is the dodgy use by the business secretary, Greg Clark, of the statistic from the Competition and Markets Authority that consumers were paying £1.4bn more than they would in a truly competitive market. Yes, the figure was in last year’s report. But what Clark fails to mention is that the CMA concluded that a temporary price cap would be the wrong remedy. Four out of five members of its panel thought it would probably produce “worse outcomes for customers in the long run”.

The second suspect notion is that regulator Ofgem can do what is demanded and set a price cap that simultaneously protects customers, promotes competition, encourages switching and incentivises efficiency. Those goals pull in different directions. There may not be a magic number that serves them all.

Third, does anyone seriously believe that the “broken” energy market will be repaired by the roll-out of smart meters? If the prospect of £200-a-year savings didn’t excite two-thirds of consumers, why will access to a digital readout of usage?

Fourth, there is the irritating pretence that Ofgem is still independent. It won’t be, or least not by traditional definitions. Within narrow parameters, parliament will be telling the regulator how to regulate.

For all that, sympathy for the big six suppliers is approximately zero. They had a couple of decades after privatisation to appreciate they were asking for trouble by milking loyal or lazy customers. They made themselves an easy target for a government in desperate need of a popular policy.

Union courts trouble

It’s a bit rich for the CWU to argue that Royal Mail’s successful request for an injunction against next week’s planned strike was “a desperate delaying tactic.” The tactic was wholly predictable. Royal Mail sought a legally-binding five-week period of mediation in a pre-privatisation agreement in 2013. Since the union signed the document, which also offered guarantees against out-sourcing jobs and so on, it cannot be surprised the Royal Mail wanted to enforce the terms.

The CWU is on firm ground when it says that the injunction won’t solve the dispute. It is also true that another strike can be called when the mediation process is completed. But CWU members might also appreciate an explanation of why the leadership ever expected to win in the high court on Thursday.

This article titled "Cryptocurrency craze wins over Harry Redknapp – but gets red card from others" was written by Nils Pratley, for The Guardian on Friday 13 October 2017 06.22am


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