In a Provençal village at the beginning of August, I met a tourist from New Orleans who said his home town lay almost five metres below sea level and that one of these days a disaster was inevitable. This was several weeks before anybody had sight of Hurricane Katrina. My acquaintance's advice to 'see New Orleans while you can' was overtaken by events.
He was one of many Americans who had opted for Provence rather than risk encountering bombers in London. Disapproval of the French for being 'cheese-eating surrender monkeys' over the Iraq war has given way, in certain circles, to recognition that they were right. The irony that flood prevention and rescue work in New Orleans suffered from a diversion of resources to Iraq has been noted.
Before the catastrophe the British government was hoping it had made progress in raising US interest in its 'Marshall plan for Africa'. Now the talk in Washington is of a bill for $60 billion or so for the reconstruction of New Orleans - which is of the order of the Organisation for Economic Co-operation and Development (OECD) countries' combined annual overseas aid budget.
The price of oil had risen sharply even before the refining facilities in the Gulf of Mexico were damaged by the storm. Although every effort is being made to draw on reserves of oil, the OECD is sufficiently concerned about the potential shock to the world economy from higher oil prices for its chief economist Jean-Philippe Cotis to have called upon central banks to be relaxed about interest rates for the time being.
'As long as inflation expectations remain well anchored,' says Cotis, 'higher oil prices seem to call for lower interest rates than would otherwise be the case.'
Cotis was speaking several weeks after the Governor of the Bank of England, Mervyn King, was out-voted over whether the slowdown in the British economy warranted a cut in rates: the 'external' members of the monetary policy committee (MPC) and the bank's chief economist, Charles Bean, favoured a reduction; the bank's 'politburo' did not.
That position seems to have been maintained at last week's monthly meeting of the MPC but, if things deteriorate further, Cotis's advice may well be taken in due course.
It is not unprecedented for the bank governor to be outnumbered. Eddie George gave his colleagues the impression of being in the minority on at least two occasions, but voted with the consensus. Last month King had made his views so forcibly, and at such length, it was impossible for him to back down. Paul Volcker, when chairman of the US Federal Reserve, was once outnumbered, called a coffee break, and threatened to resign unless others went along with him -- which they duly did.
Although he does not like the metaphor King is generally seen as an inflation 'hawk'. Last month he observed that UK inflation has 'if anything, been even more stable' than in the US. 'But this success carries a risk for the future,' he added pointedly.
Gordon Brown, by contrast, while having invested heavily, for a Labour Chancellor, in gaining his counter-inflation credentials, is impressed by the strength of disinflationary forces (other than oil) in the world economy, and is almost certainly placing his hopes on help from the MPC to get him out of the box where the financial markets, and the Conservatives, are busily trying to remove some of the gloss from his reputation.
It was interesting also in August that King had fun with the Chancellor's 'golden rule' for measuring the success of fiscal policy. A keen football fan (in common with the Chancellor), King can spot moving goalposts.
This is a space to watch. Unlike many a predecessor, King shows little sign of wanting to be reappointed. Friends say he is a 'one-term governor', a position which bolsters the independence he and the bank already possess - provided they can all agree.
On the subject of inflation hawks, I was sad to learn of the sudden death of my near neighbour in Provence, Wim Duisenberg, first president of the European Central Bank. For years in the local villages I used to see Dutchmen who looked like Duisenberg. Then I realised they were Duisenberg.
It was characteristic of the way our European partners approached the single currency that the French wanted their man, in order to achieve a more expansionary European monetary policy, and the Germans wanted a Dutchman, because they thought he was the best person to conduct strict Bundesbank-style counter-inflation policies in Europe, in return for their surrendering the Deutschmark. The absurd compromise was that Duisenberg was appointed for a full term - provided he did not serve it.
He duly stepped down in favour of Jean-Claude Trichet, whose main achievement, as ECB president, is not to have produced significantly expansionary monetary policies in the eurozone but to have prevented the ECB from being even more deflationary - which the Bundesbank members of the ECB would favour even now. Central bankers have a duty to opine on monetary policy, but have a tendency to lecture governments on fiscal policy as well. Central bankers are more entitled to comment on the fiscal balance (the budget deficit) than about levels of government spending: the fiscal balance affects the conditions in which they use interest rates to control demand and inflation, whereas the level of public spending is a matter for governments and the electorate.
Even so, the ECB has been overzealous in its comments about the Stability and Growth Pact, during a period of stagnation or slow growth in the eurozone.
By contrast, Alan Greenspan has been (thanks not least to the Federal Reserve's brief to aim at maximum employment as well as price stability) a much greater expansionist than his ECB counterparts. On the other hand, early in 2001 he showed his true blue colours by lending his considerable name to the Bush programme of tax cuts to the rich - tax cuts which have done serious harm to the fiscal deficit that central bankers always worried about. Incidentally, Greenspan has never been outvoted but has on occasion used a heavy hand to keep dissent to a minimum on his committee.
Few will oppose a 'Marshall plan' for New Orleans, and some liberals hope the catastrophe will persuade the Bush administration to give up its programme of tax cuts for the rich and more cuts in help for the poor. However, even now serious Washington commentators say they believe that Congress will plough on with its ultra-right wing agenda.
Which brings us to this 'flat tax', proposed by some UK Conservatives and advisers to German opposition leader Angela Merkel. This would be regressive, and bogusly justified as encouraging enterprise and raising revenue.
One of our leading newspapers maintains that Nigel Lawson's dramatic tax cuts in 1988 led to a surge of revenues, but they did not. The official papers of the time indicated a 'budgetary cost' at an annual rate of up to £6 billion. People with long memories will recall that even then the Treasury was too optimistic about future flows of revenue. So far from moving towards a flat tax and abolition of the top rate, the UK government should be thinking of increasing taxes on the incredibly prosperous upper echelons of this country if it is to make serious inroads into the social inequalities that are still rampant in our society.
That is something that the late Robin Cook would have advocated. He will be much missed.
