US stock market ignores health warning

Even Greenspan can't go on forever

News latest: "Fed chairman rushed to hospital; shares unchanged." Perhaps this is a callous point, but until recently, reports that Alan Greenspan was being admitted to hospital with prostate trouble would have been cause for a possible stock market rout.

Indeed, during the heady days of the boom, when the septuagenarian central banker was held to have invented a secret policy potion to keep the American economy sweet, just a rumour of his untimely demise was enough to send asset prices reeling.

It is true that Greenspan's complaint does not sound unduly threatening. His aides have made it clear that no cancer has been found and that he should soon be back at his desk in Washington. But at the age of 77, simply entering a hospital entails a computable risk.

So why no market reaction?

While Greenspan famously warned against "irrational exuberance", he later bought into the idea of the technology-led US productivity miracle. Synonymous with the golden decade of growth, Greenspan's own stock price subsequently plunged when so much of that growth turned out to be specious.

At the same time, there is an acceptance that the length and severity of the downturn has been very much outside Greenspan's control. The relentless flow of confidence-sapping news has depleted the Fed's collection of policy weapons to the point where US interest rates now stand at 1.25%.

In January 2000, when Bill Clinton reappointed Greenspan for his fourth consecutive Fed term, we noted here that the outgoing president seemed to have a burning desire to underwrite the asset bubble on Wall Street. Three and a bit years on, the fact is that the markets have already priced in Greenspan's demise - whatever President Bush's thoughts on his reappointment.

No excuse for Chubb

Chubb has not been a runaway success since it was demerged from Williams, although that is unlikely to bring tears to the eyes of Roger Carr and Sir Nigel Rudd, who masterminded the break-up.

They pocketed £2m apiece for dividing the conglomerate into Chubb and Kidde, and then Carr went on to chair the security group in a non-executive capacity for a modest £180,000 a year.

It was billed in the 2000 prospectus as a company "well-positioned to continue its expansion", but within months saw profits slump by two thirds. Various troubles were blamed, but even then chief executive Robert Gasparini admit ted management had taken its eye off the ball during the demerger.

Eyes and balls, it seems, have never quite made contact since. In February of this year, Gasparini finally paid the price of continued failure while Carr shuffled off to be a non-exec elsewhere and was replaced by Sir Bob Horton. Robert Findler took up the chief executive reins with a promise of better things to come.

Yet now we've got another profit warning and a fresh string of excuses from Findler, including an assertion that he has only just discovered the depths of the problems after a global tour of divisional offices. This may have sounded believable from an outside appointee but was ludicrous coming from Findler. He was finance director at Chubb after the Williams break-up and most recently deputy chief executive.

The pulverised share price - down from 260p on flotation to a recent low of 58p - had already attracted the predatory attention of America's United Technologies. Yesterday's profit warning could, in different circumstances, be viewed as a scorched earth bid defence. Sadly, however, management credibility at Chubb is already well beyond repair.

Bowker's dim view

Easter has traditionally been a time of toil for travellers. The annual travail, which kicked off with a strike across 12 regions, came to a belated end when London's Paddington station finally reopened, well behind schedule. The weekend's engineering works had been delayed by "high winds".

Those whose journeys have been disrupted have even less cause than usual to cheer. Last week the strategic rail authority defaulted on a key pledge to increase compensation for delayed passengers. The news was in line with a steady flow of cutbacks since the government shaved £312m from the SRA's budget. So far this year the SRA boss Richard Bowker has swung the axe over 180 daily train services. He has frozen grants for freight operators, suspended a fund for "rail passenger partnerships" (which improve facilities on stations) and radically scaled back plans to upgrade the east coast mainline.

Given the funding squeeze, it is difficult to criticise any of these decisions. In fact, Bowker has injected a useful dose of realism. However, as the industry's cheerleader, Bowker is left in an odd position. Playing a long game, there is an incentive for him to talk down the industry. If he presents the worst possible picture, Gordon Brown may accept the need for extra rail funding in next year's comprehensive spending review.

So the SRA is cheerfully owning up to all the network's deficiencies, mincing few words in describing the pain of its budgetary crisis. That hair-shirt approach can only be the coldest of comfort for passengers; still, Easter was never intended to be fun.