Posts tagged "banking"
03 Nov 2009The Mystery of Finance
Having attended an Investment Event last night I started to wonder about how and why people invest. I am currently reading Quicksilver by Neil Stevenson which is set in the 17th/18th century which is a period which marks the invention of finance, paper money, short selling and many other wonderful things. Almost as soon as money was invented so was fraud, bubbles and bankruptcy. At one point in Quicksilver everyone discovers that the Goldsmiths kind of early bankers have empty vaults and all their money has gone.
Surely we have learnt something from these kinds of shocks, well clearly not as the recent history of banking shows. So thats great but what does it teach us about now. Well it is clear that within 5 years there will be more online revenue in the games industry than through retail. When you go for lunch everyone has an idea for an iPhone app (always a good sign of a boom) 10 years ago it was ideas for websites or was it tulip bulbs I forget.
We all like to follow the crowd and investors more than most, this is generally good if you can get in early enough but strangely investors are running scared of iPhone and haven’t even really noticed that download games change the rules. There have been a couple of big investments I think Glu mobile got a fair amount of money but most UK investors have a strange disconnect they know iPhone is successful but don’t seem able to unpin the risks.
31 Jan 2009Why the recession/depression has hit bottom
This is a strange kind of post when politicians are getting shot down for mentioning ‘green shoots’ – in a reference to Norman Lamont and the 90s recession. But you can get all the real information here, this recession will be V shaped, as in very quick and steep down, and possibly up again at the same rate. But the big question and unknown is where the bottom will be.
We may have hit bottom this week. All the banks share prices have doubled this week but why? Remember, bank shares are a symptom not a cause. In fact last week all UK banks other than HSBC were going out of business, why the change? Well, in the far off US of A house prices stablised for the first time in 3 years. This in theory puts a bottom on the losses the banks in the UK will experience, based on the UK economy following USA, and also that we have lots of US debt over here.
Will it stick? Well it might this crash however is cyclic, and to misquote Paul Krugman, is the mother of crashes. We have over priced housing, as in Japan early 90s, bank runs like both the 1930s and the 1910 trust fund crisis, and possibly, though thankfully not yet in the UK, a currency crisis like Asia/Argentina in the 1990s. In fact the Irish are complaining we devalued the £ on purpose,which i am sure we did. Not that we had any choice.
We may have seen the bottom, therefore. In about 4 years we will escape from the crash, I am old enough to have had a father (he was 49 when I was born) who remembered and talked often of the Great Depression. It genuinely influenced his actions until the end of his life (he was mean with money). I hope this is not the world my children will live in.