Warren Buffet - a Jaded Sage?

The jaded sage
By Chan Akya in Asia Times Online

Warren Buffett, besides being the Sage of Omaha and one of the wealthiest men to ever walk this planet, is also an American hero. A man who popularized the notion of investing your savings prudently, taking a knife to Wall Street excesses and more recently, the architect of an effective minimum tax for rich Americans. All in all, your regular billionaire next door.

Of course I can also recount all the reasons why anyone who bothered to print this article and read the first paragraph got disgusted, crumpled the paper into a little ball and threw it into the nearest waste bin.

You know, stuff like his holdings in major American scams like Moody's which he purchased due to the massive profits they were making from selling fake triple-A ratings all around. Or his rescue of such amazing firms as Goldman Sachs in the midst of the financial crisis, in effect protecting them not so much from aggressive market speculators but perhaps the major regulatory bodies as well (Mr Buffett is a known supporter of and donor to President Barack Obama).

Even that supposed act of folksy good humor ("my secretary pays a higher tax rate than I do") hides an ugly word: "legacy". Mr Buffett is old and if he had wanted to pay higher taxes, well he had the last 60 years in which to do it.

But I don't care about any of Mr Buffett's flaws any more than I lose sleep over that stupid woman who unfailingly puts mayonnaise on my sandwich despite being told not to every day. My getting upset doesn't change a thing, and just ends up spoiling my day: it's easier for me to just buy my sandwiches somewhere else. That's where I left Mr Buffett - that is, until his latest investment letter hit the web and through acts of generosity by my friends, made it into my inbox. Ten times over.

Cold on gold
I don't know why so many of them did that - but it may have something to do with his statements about irrational choices that investor make about assets. He writes:

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As "bandwagon" investors join any party, they create their own truth - for a while.

Okay, so if I understand this right, Mr Buffett objects to the fact that gold cannot be manipulated, conjured up out of thin air and that it draws a bunch of people weary of Keynesian money printing into its fold. I am not going to suggest that Mr Buffett is thick or something, but isn't all of the above the very point about owning a store of value in the first place?

I don't know about you, but if I could travel through the centuries I would sure as hell like to have in my pocket something that would still be worth something in purchasing power that approaches its current value.

Imagine the following scenario: your grandfather leaves us some wealth but you only get it 50 years later. Now, what would you have liked that "wealth" to have been: cash in US dollars or gold coins? Of course other assets would have worked better - "shares in Apple" for example. Then again, if your grandfather had given you shares in Apple and you got them in 1998, your general feelings of gratitude towards him would have been a somewhat dimmer.

Then Mr Buffett goes on with his diatribe:

Today the world's gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce - gold's price as I write this - its value would be $9.6 trillion. Call this cube pile A. Let's now create a pile B costing an equal amount. For that, we could buy all US cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world's most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

... A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops - and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Yup, valid points there. Then, again Mr Buffett, I wonder how those farmers would pay for the oil to use in their harvesters and how those oil workers would pay for all the grains they would need to eat. Would they own shares in each other and pay the other party dividends in kind? Or would they transact with a common currency, like gold?

And all the analysis misses the point about corporate fraud, that uniquely American preoccupation that has seen many a top firm go completely bust because of financial and accounting shenanigans. If Mr Buffett had mentioned BP instead of Exxon (and written this article two years ago rather than now) he would have had egg on his face. (See also "BP, Bhopal and Karma", Asia Times Online, June 19, 2010, one of my past articles on the subject of corporate responsibility.

Mr Buffett misses the point entirely about what gold is and what it is supposed to do. In a world where investors have ample reason to lose faith in governments and the financial system, the position of a common store of value that is recognizable and usable across all humanity and is itself beyond religion and politics in terms of being manipulated around (besides being no mean feat by itself) is made stronger, not weaker.

That is not to say that I am recommending you folks to buy gold and nothing else; my view has always been that a building up a little hedge for your financial assets with physical gold is no bad thing. I don't speculate in gold nor do I believe you should.

Of course, he clarifies similar points later on his spiel as follows:

My own preference - and you knew this was coming - is our third category: investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment. Farms, real estate, and many businesses such as Coca-Cola, IBM and our own See's Candy meet that double-barreled test. Certain other companies - think of our regulated utilities, for example - fail it because inflation places heavy capital requirements on them. To earn more, their owners must invest more. Even so, these investments will remain superior to nonproductive or currency-based assets. Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See's peanut brittle. In the future the US population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.

Really? The best that Mr Buffett can conjure up as stores of "productive" assets are those that generate software consulting services, sugared water with noxious chemicals and over-sweet artificially flavored foodstuffs? Is it possible that all of these companies will even exist 200 years from now, or will a bunch of lawsuits or corporate fraud take one or more of them down as they have many an American corporation?

This is neither about questioning his investment choices nor indeed to taunt a proud American on that country's potential failings. The investor letter though is emblematic of the core ill plaguing the West now; namely a failure to question the current logic of organization underpinning the economy.

On the other end of the scale, it is not immediately apparent that a deleveraging America would need as many cans of sugared water with noxious chemicals as it does now; nor indeed that the current system of savings through stocks could survive a Japan-style lost decade when the locus of the economy shifts from consumption to production.

In a different way of thinking, it is a good thing that Mr Buffett writes his letters the way he does now. Two decades from now, economists and students of finance may ponder the madness of our times that made a man like him the foremost investing genius in the world.

It's all upto Morgan

For much of his career, Eoin Morgan has had the door opened welcomingly wide for him. No longer

Ed Smith

February 29, 2012

As two dazzling, attacking shot-players, Eoin Morgan and Kevin Pietersen are often talked about in the same breath. Indeed, they are the two top batsmen in the World T20 rankings. But there the similarities end.

I am not referring to their diverging current form. Pietersen has confirmed a spectacular return to form, with two ODI hundreds and a match-winning 62 not out in the deciding T20. Morgan, in contrast, has struggled this winter and been omitted from the England Test squad that will play Sri Lanka.

No, the deeper differences are more revealing. Pietersen is a natural outsider who has had to make his own way; Morgan has always benefitted from the smiles and support of the cricketing establishment. Pietersen forced his way into international cricket through sheer weight of runs; Morgan was hand-picked as a potential star. Pietersen's critics have always been waiting for him to fail; Morgan's many admirers have always made the most of his successes.

Pietersen came from a great cricketing culture, South Africa, where he never broke through. Even in Natal, he was not earmarked for future greatness. In coming to England to pursue a better cricketing future, Pietersen made himself doubly an outsider - the foreigner determined to achieve greatness among an adopted people.

Morgan, in contrast, is the lauded favourite son of Irish cricket. He has always been the brightest star in a small galaxy. Not for him the waiting and wondering if he would make the grade. Irish cricket has been spreading the word about Morgan - that he was a phenomenal talent - from his teenage years.

In 2007, Middlesex played Ireland in Dublin. Ironically, two of Middlesex's best players were Irish - Morgan and Ed Joyce - so it was a homecoming of sorts for them. Though Joyce was the older, more senior figure, it was Morgan who bestrode the scene. He was a different man in Ireland; he was top dog and he knew it. In time, Middlesex and England fans also came to know and admire that cocksure character.

But if we dig a little deeper, the Morgan story is less conclusive that it first appears. When he was first selected for England in 2009, Morgan had already proved certain things in county cricket. We knew that few players (if any) have a greater natural ability to strike the ball with immense power derived from timing rather than brute strength. We knew that he had an instinctive feel for one-day and T20 cricket, a hunter's thrill of the chase and a showman's love for the stage. We knew that his outward demeanour was apparently confident and yet hard to read.

We also knew - if anyone cared to look at the numbers - that his first-class record was unremarkable (he averaged in the mid-30s) and that his temperament had rarely been tested in circumstances that didn't suit him.

Now, three years later, our knowledge of Morgan has not advanced all that much. Yes, we have learnt that he was not phased or overawed by international cricket. But few thought he would be.

In more substantive terms, Morgan has succeeded at things he was always good at, and struggled at disciplines that do not come easily to him. Morgan's instant successes in international T20 and ODI cricket reflected his dominant reputation in those two formats in county cricket. In the same way, his relative lack of success in Test cricket reflects his track record in all first-class cricket.

	Sport gets harder in many respects, and the sportsmen who thrive in the long term are those who have the personality to take more of the weight on their own shoulders. Ultimately a great player must be his own problem-solver, therapist and coach

We are about to learn a lot more about Morgan. This is the first time in his cricketing life that he has been on the outside. Until now, he has been the beneficiary of a never-ending fast track - the path ahead constantly being cleared for him. At Middlesex the coaching staff fretted about anything that might "hold Morgan back", even when his first-class numbers did not demand selection. One coach used to begin selection meetings by asking, "How are we going to get Morgan into the team?" As though Morgan himself shouldn't have to worry about the troublesome details of getting runs and making his own case. England, too, picked him at the first available opportunity.

Well, the era of fast-tracking and "how are we going to get Morgan into the team?" just ended. For now, he is on his own, armed with just a bat and his dazzling skills. He will have to make his own way back. The door is far from closed. But nor is it permanently wide open.

Great players in every sport will tell you that it is much harder to stay at the very top than it is to get there in the first place. The same point can be phrased differently. As sportsmen get older, they have to become ever more self-reliant. The support systems drop away, one by one, leaving you standing alone. Adoring coaches who were once enamoured of sheer talent become frustrated by the failure to convert talent into performance; team-mates who once sensed a star in the making begin to expect games to be won, not merely adorned; fans are no longer thrilled by what you can do, but increasingly annoyed by what you cannot.

Sport gets harder in many respects, and the sportsmen who thrive in the long term are those who have the personality to take more of the weight on their own shoulders. Ultimately a great player must be his own problem-solver, therapist and coach. That revolves around character, not talent.

Many people - including me - believe Morgan is one of the most gifted cricketers in the world. In my new book I wanted to explore the careers of a couple of athletes - drawn from all sports - who had been blessed with truly remarkable talent. The two examples I used were Roger Federer and Morgan.

Morgan has already proved me right about his talent. Now comes the interesting part: what is he going to do with it?

Trust Business above all is David Cameron's motto.

Britain is being rebuilt in aid of corporate power

Trust business, Cameron tells us, self-regulation is a force for social good. Silly me – I thought it was an invitation to disaster

• 
• • George Monbiot
  • guardian.co.uk, Monday 27 February 2012

Illustration by Daniel Pudles

 

They used to do it subtly; they don't bother any more. Last week a column in the Telegraph argued that businesses should get the vote. Though they pay tax, Damian Reece maintained, they have "no say in the running of local or national government". To remedy this cruel circumscription, he suggested that elections in the UK should follow the example set by the City of London Corporation. This is the nation's last rotten borough, in which ballots in 21 of its 25 wards are controlled by companies, whose bosses appoint the voters. I expect to see Mr Reece pursue this noble cause by throwing himself under the Queen's horse.

Contrast this call for an extension of the franchise with a piece in the same paper last year, advocating an income qualification for voters. Only those who pay at least £100 a year in income tax, argued Ian Cowie, another senior editor at the Telegraph, should be allowed to vote. Blaming the credit crisis on the unemployed (who, as we know, lie in bed all day devising credit default swaps and collateralised debt obligations), Cowie averred that "it's time to restore the link between paying something into society and voting on decisions about how it is run". This qualification, he was good enough to inform us, could exclude "the majority of voters in some metropolitan areas today". The proposal was repeated by Benedict Brogan, the Telegraph's deputy editor.

No representation without taxation: wasn't that Alan B'stard's slogan in the satirical series The New Statesman? Votes for business, none for the poor: this would formalise the corporate assault on democracy that has been gathering pace for the past 30 years.

This column is a plea for distrust. Distrust is the resource on which democracy relies. Distrust inspires the scrutiny and accountability without which representation becomes a lie. Distrust is all that stands between us and bamboozlement by people who, like Reece, Cowie and Brogan, channel the instincts of the billionaire owners of newspapers and broadcasters.

Last week David Cameron argued that those who say business "isn't really to be trusted" do so as a result of "snobbery". Business, in fact, is "the most powerful force for social progress the world has ever known". Not democracy, education, science, justice or public health: business. You need only consider the exemplary social progress in Zaire under Mobutu, Chile under Pinochet, or the Philippines under Marcos – who opened their countries to the kind of corporate free-for-all that Cameron's backers dream of – to grasp the universal truth of this statement.

He gave some examples to support his contention that regulation can be replaced by trust. The public health responsibility deal, which transfers responsibility for reducing obesity and alcoholism to fast-food outlets, drinks firms and supermarkets, reaches, Cameron claimed, the parts "which the state just can't".

Under the deal, Subway and Costa are "putting calorie information up front when people are buying". The state couldn't possibly legislate for that, could it? Far better to leave it to the companies, who can decide for themselves whether they inform people that a larduccino coffee with suet sprinkles contains no more calories than the average Olympic sprinter burns in a month. He forgot to mention the much longer list of companies that have failed to display this information.

Another substitute for regulation, he suggested, is a programme called Every Business Commits. Through its website I found the government's list of "case studies of responsible business practice". Here I learned that British American Tobacco is promoting public health by educating and counselling its workers about HIV. The drinks giant Diageo is improving its waste water treatment process. Bombardier Aerospace is enhancing the environmental performance of its factories, in which it manufactures, er, private jets. RWE npower, which runs some of Britain's biggest coal and gas power stations, teaches children how to "to think about their responsibilities in reducing climate change".

All these are worthy causes, but they are either peripheral to the main social harms these companies cause or look to my distrustful eye like window dressing. Nor do I see how they differ from the "moral offsetting" that Cameron says happened in the past but doesn't today. But this tokenism, in the prime minister's view, should inspire us to trust companies to the extent that some of the regulations affecting their core business can be removed.

We are living through remarkable times. The government, supported by the corporate press, is engaged in a naked attempt to rebuild the life of this country around the demands of business. Extending the project begun by Tony Blair, Cameron is creating an economy in which much of the private sector depends on state contracts, and in which the government's core responsibility is to provide them. If this requires the destruction of effective public healthcare and reliable state education, it is of no concern to an economic class that uses neither.

The corporations gaining ever greater powers will be subject to less democratic oversight and restraint, in the form of regulation. Despite the obvious lesson of the credit crunch – that self-regulation is an invitation to disaster – Cameron wants to extend the principle to every corner of the economy. Trust them, he says: what can possibly go wrong?

WikiLeaks publishes STRATFOR intelligence emails

Ellen Branaghin The Independent

Monday, 27 February 2012

Whistleblowing website WikiLeaks has started to publish more than five million confidential emails from a global intelligence company.

The emails, dated from July 2004 and late December 2011, are said to reveal the "inner workings" of US-based company Stratfor.
The group said the emails show Stratfor's "web of informers, pay-off structure, payment-laundering techniques and psychological methods".
WikiLeaks claims the company "fronts as an intelligence publisher", but provides confidential intelligence services to large corporations such as Bhopal's Dow Chemical Co, Lockheed Martin, Northrop Grumman, Raytheon and government agencies, including the US Department of Homeland Security, the US Marines and the US Defense Intelligence Agency.
At a press conference in London today, WikiLeaks founder Julian Assange would not reveal where the emails had come from.
"We are a source protection organisation," he said.
"As a source protection organisation and simply as a media organisation we don't discuss or speculate on sourcing."
The documents are believed to have come from loose-knit hacker group Anonymous, which claimed to have stolen information from the firm in December.
WikiLeaks said the material contains privileged information about the US government's attacks against Julian Assange and WikiLeaks and Stratfor's own attempts to subvert WikiLeaks. The group said there are more than 4,000 emails mentioning WikiLeaks or Julian Assange.
But today Mr Assange said more information would emerge in the near future: "We have looked most closely at the actions against us, the bigger story is likely to come out of this probably in three or four days' time."
Mr Assange said: "Today WikiLeaks started releasing over 5 million emails from private intelligence firm Stratfor based in Texas, the United States.
"Together with 25 other media partners from around the world we have been investigating the activities of this company for some months.
"And what we have discovered is a company that is a private intelligence Enron.
"On the surface it presents as if it's a media organisation providing a private subscription intelligence newsletter.
"But underneath it is running paid informants networks, laundering those payments through the Bahamas, and through Switzerland, through private credit cards.
"It is monitoring Bhopal activists for Dow Chemicals, Peta activities for Coca-Cola.
"It is engaged in a seedy business."
Mr Assange said Stratfor was using the secret intelligence it had paid for to invest in a wide range of "geopolitical financial instruments".
"This makes News of the World look like kindergarten," he added.
Mr Assange said the exposure of the emails was part of a long history WikiLeaks has had in exposing the activities of secret organisations.
"The activities of intelligence organisations increasingly are privatised and once privatised they are taken out of the realm of the Freedom of Information Act, of US military law and so they are often used by governments who want to conceal particular activity.
"But Stratfor is simply out of control.
"Even as a private intelligence organisation it is being completely hopeless in protecting the identity of its informants, or even providing accurate information. It is engaged in internal deals with a financial investment firm that it is setting up.
"It really is some type of Enron where there is not even proper corporate control within the organisation."
WikiLeaks said it had worked with 25 media organisations to investigate and information would be released over the coming weeks.
The group said the emails expose a "revolving door" in private intelligence companies in the US, claiming Government and diplomatic sources give Stratfor advance knowledge of global politics and events in exchange for money.
"The Global Intelligence Files exposes how Stratfor has recruited a global network of informants who are paid via Swiss banks accounts and pre-paid credit cards," the group said.
"Stratfor has a mix of covert and overt informants, which includes government employees, embassy staff and journalists around the world.
"The material shows how a private intelligence agency works, and how they target individuals for their corporate and government clients."
WikiLeaks accused Stratfor of "routine use of secret cash bribes to get information from insiders", and claims an email from chief executive George Friedman in August 2011 suggested his concern over its legality.
In it, he wrote: "We are retaining a law firm to create a policy for Stratfor on the Foreign Corrupt Practices Act.
"I don't plan to do the perp walk and I don't want anyone here doing it either."
The group said: "Like WikiLeaks' diplomatic cables, much of the significance of the emails will be revealed over the coming weeks, as our coalition and the public search through them and discover connections."
It said Stratfor did secret deals with dozens of media organisations and journalists - from Reuters to the Kiev Post.
"While it is acceptable for journalists to swap information or be paid by other media organisations, because Stratfor is a private intelligence organisation that services governments and private clients these relationships are corrupt or corrupting."
The group said it has also obtained Stratfor's list of informants and, in many cases, records of its payoffs.
PA

Some History of Monetary Unions

Making friends the shared currency way

Greece is falling out with its neighbours over their common currency - just as it did about a century ago. But forging closer bonds through shared currencies rarely works for long, says historian David Cannadine.

The continuing travails of the Greek economy and the threat they represent to European Monetary Union may both seem novel and unprecedented, but in several significant ways, we've been there before.

Far from being a recent innovation, there have been monetary unions for almost as long as there has been money. But across two and a half millennia, and whatever varied forms they may have taken, few of them have endured, which helps explain why they've been so easily and so largely forgotten.

On earlier occasions, too, the part played by Greece has been pivotal - sometimes positive but sometimes negative. And history has recently been repeating itself in other ways, for the present single currency is not the first such European scheme from which Britain has held aloof.

It's no exaggeration to say that European history is littered with the ruins of earlier endeavours. The most immediate predecessor to the EMU was the 19th Century Latin Monetary Union, which attempted to unify several European currencies at a time when most circulating coins were still made of gold or silver.

It came into being in August 1866; its initial members were France, Belgium, Italy and Switzerland, and they agreed that their national currencies should be standardised and interchangeable. There was no shared, single legal tender, but the currencies of the member countries were pegged at a fixed rate with each other.

Two years later, the four founding nations were joined by Spain and Greece and in 1889 the union was further enlarged by admitting Romania, Bulgaria, Venezuela, Serbia and San Marino. Thus the enlarged Latin Monetary Union lasted until World War I, which abruptly brought to an end the global financial system based on the gold standard. The result was that the LMU effectively came to an end in 1914, although it lingered on as a legal entity until its formal dissolution in 1927.

Negotiations to bring such a union into being had started in 1865, and Britain had initially been part of them. But two proposals were made, which proved to be a major stumbling block: the first was that the UK must reduce the amount of gold in its sovereigns, albeit by only a tiny amount, to make one pound sterling the exact equivalent of 25 French francs.

The second was that Britain must give up shillings and pence and decimalise its coinage to bring it into line with the other European currencies. Neither of these proposals was deemed acceptable, and so then, as in 1999, Britain stayed out, and left the continentals to their own devices. It also showed no interest in another and even more grandiose scheme floated by the French in 1867, for what was termed a "universal currency", which would have been based on equivalent gold coins to be issued by France, Britain and the United States.

Here were signs and portents aplenty of recent British attitudes and behaviour.

As Walter Bagehot, the essayist and editor of The Economist, put it in the late 1860s, there seemed to be a real danger that, "Before long, all Europe, save England, will have one money, and England will be left outstanding with another money."

If this happened, Bagehot went on, "We shall, to use the vulgar expression, 'be left out in the cold'. If we could adopt this coinage ourselves without material inconvenience, I confess I, for one, should urge our doing so."

But Bagehot believed that the practical difficulties of such a step were "simply insurmountable". He feared more generally that "the attempt to found a universal money is not possible now", and the unhappy fate of the Latin Monetary Union would later bear him out. Yet with the establishment of the late 20th Century European Monetary Union, it did seem as if the state of affairs, which Bagehot one day envisaged - and feared - had come very close to realisation.

But in 2001, Greece joined the European Monetary Union, and the rest, as they say, is history - but a history that is not yet anything like being over.

Ever since it gained its hard-fought independence from the Ottoman Empire in 1832, Greece has been plagued by recurrent budget crises, frequent state defaults and long periods during which it's effectively been cut off from the international capital markets.

So while it was one of the earliest nations to join the Latin Monetary Union, its membership soon became more a cause of concern than celebration, for its chronically weak economy meant successive Greek governments responded by decreasing the amount of gold in their coins, thereby debasing their currency in relation to those of other nations in the union and in violation of the original agreement.
So irresponsible and unacceptable did Greece's behaviour become that it was formally expelled from the Latin Monetary Union in 1908. As a result, some effort was made to readjust the nation's
monetary policy and Greece was readmitted to the Union two years later. But by then, the whole enterprise was increasingly fragile, its future looked increasingly uncertain, and the outbreak of WWI was only four years off.

The Latin Monetary Union was not the only one of its kind in Europe during the 19th Century. A German monetary union was created in 1857, which replaced the many different currencies of the many different German states with a dual system based on the north German thaler and the south German gulden. It proved to be a rare success story among such ventures, surviving until German unification in 1870, when political union was effectively aligned with monetary union and five years later the two separate currencies were replaced by the reichsmark.

Less successful was the Scandinavian Monetary Union, established between Denmark and Sweden in 1873, which was joined by Norway two years later. The aim was to do for Scandinavia what the Latin Monetary Union was attempting more broadly for Europe as a whole but it, too, effectively ceased to function on the outbreak of WWI and it was formally brought to an end in 1924.

Such efforts to create common currencies during the 19th and 20th Centuries are only the most recent examples of a process that's been going on for almost as long as coinage itself has existed. It's an intriguing historical irony that among the pioneers of these endeavours seem to have been none other than the ancient Greeks.

One of the earliest examples of such a union occurred sometime about 400BC, along the western coast of Asia Minor, where seven Greek states allied themselves and produced a coinage that directly foreshadowed later European monetary unions. On the front of the coins was a common design of the baby Heracles strangling a snake, and the first three letters of the Greek word for alliance. On the reverse, each state placed its own particular image. All these coins were minted to the same weight and formed a unified currency, which was the tangible symbol of the seven members' economic alliance.

No-one quite knows why or when this early effort at a monetary union collapsed but 200 years later, the ancient Greeks had another try, organised through what was known as the Achaean League, an alliance of territories and city states covering the whole of the Peloponnese that had been formed about 280BC.

Once again, their shared currency had a common obverse design, in this case the head of Zeus, and reverse patterns that were specific to the individual issuing authority.

The result, according to the historian Polybius, was that the Greeks "had not only formed an allied and friendly community but they have the same laws, weights, measures and coinage, as well as the same officials, council and courts of justice". Here was a level of integration, which the most ardent and ambitious Eurocrat of today might envy and this may help explain why, unlike the Latin or the Scandinavian monetary unions, the Achaean League lasted for well over 100 years.

Its eventual dissolution, in 146BC, was not because the members of the league fell out with each other, over the currency or anything else but was the result of an external shock in the form of a crushing military defeat by the Romans at the Battle of Corinth. Which leaves us with the following paradox: the ancient Greeks were pioneers of monetary unions and were quite eager to keep them in being.

Modern Greece, by contrast, has been a threat and a danger to any monetary union that it has ever joined.

Sonia Gandhi Exposed

Tarek Fatah on the Arab Identity of Pakistan