His intervention convinced GRE that it should settle for a rival bid from Axa RSA was left looking outgunned and exposed. Axa meanwhile went on to demonstrate that it had achieved an astonishing good deal, flogging off enough of GRE to cover its costs while keeping the high growth health insurance arm, PPP, and some of the general insurance book.
Since then most pundits have been confidently predicting that it is only a matter of time before there’s a bid for RSA as well. Unfortunately it has so far stubbornly failed to materialise, despite the best efforts of some of the finest brains in the investment banking fraternity to drum one up. EVER SINCE Bob Mendelsohn, the chief executive of Royal & Sun Alliance, stuck his exceedingly well paid head over the parapet earlier this year with his flat-footed bid for Guardian Royal Exchange, the City has been waiting for it to be shot off. As the US economy enters the history books for the longest expansion ever, he will need to point it towards the runway with some vigour if he is to achieve the soft landing Mr Summers seems so confident of.. But once the Y2K fears are safely out of the way, Mr Greenspan will start preparing the markets for a rate rise at the next Fed meeting in early February. In the pipeline are big increases in health costs and probably a $1 rise in the minimum wage from $5.15 an hour.

The official figures also fail to take account of the growing amount of pay taken in the form of shares and share options.The good news story about US economic prospects has taken too firm a hold for such warning signals to dent confidence – or share prices – for now. A third of American employers say they are finding it hard or impossible to fill jobs. Revised figures from the Bureau of Economic Analysis suggest that the total wage bill in the private sector has been growing at a sprightly 8 per cent, well above the pay growth reflected in the headline hourly earnings figures on which financial markets concentrate. That is not happening spontaneously, so eventually the breaks will have to be applied through further rises in interest rates.For the time being, most people think they won’t have to be raised by much, but we could be in for a rude awakening. The pace of expansion is well above any plausibly sustainable trend, and will have to slow.

Even the most ardent New Economy converts would be hard pushed to argue that the American economy can grow at a trend rate of 4-5 per cent without triggering inflation. And down the road from the US Treasury, in the equally magnificent Federal Reserve headquarters, Alan Greenspan, optimistic as he is about the changes in the economy, will be alert as ever for hints of inflationary pressure.
Given that the entire community of analysts on Wall Street appears to have decided inflation has been abolished, this might be precisely the time to start worrying about where US and ultimately world inflation could be heading. To be fair to Mr Summers, he also warned of the need to steer clear of any complacency. YOU WOULD expect the US Treasury Secretary to be bullish about his own economy – most Americans are. But Lawrence Summers is also an economist by background and you might therefore expect him also to temper his optimism with a degree of caution and self doubt He does not.

Mr Summers, in London briefly on route to the G20 in Berlin, is the latest policy honcho to proclaim that the American economy is going from strength the strength This week’s figures seem to bear him out. Production has accelerated again, business confidence has risen again, yet there is still not a whisper of inflation in the statistics. But his candidacy generates little enthusiasm outside Germany.Given the current appetite for a strong, reforming leader, Mr Brown would be widely seen as an ideal successor at the IMF, but British sources are adamant that the time is not right for him to take up the position.. Mr Camdessus said that he also hoped reforms could be implemented quickly.However, Japan expressed some reservations about the US proposals, which suggested scaling back longer-term lending by the IMF and keeping it focussed on the prevention and cure of financial crises.The American initiative to redefine the role of the International Monetary Fund is nevertheless likely to dominate the G20 meeting.Germany is still hoping to win backing for its deputy finance minister, Caio Koch-Weser, to succeed Mr Camdessus. Mr Summers indicated that he believed the expansion was still robust.He met Gordon Brown, the Chancellor of the Exchequer, yesterday ahead of this week’s meeting of the “Group of 20″ (G20) developed and developing countries in Berlin.Germany welcomed Mr Summers’ proposals for reform of the IMF, as did Michel Camdessus, the Fund’s retiring managing director.