Hardy Guevara

So beloved by the masses in Cuba, his image now appears alongside Che!

For us there is no valid definition of socialism other than the abolition of the exploitation of one human being by another.

Everton FC - back to Wembley

I make no apologies for this, it has to be done!

Here's the penalty shootout against United on Sunday




Chelsea - you're next!!!!

Green shoots over thin ice

An interesting article from John Hussman of Hussman Funds:

Thus far, we’ve got a strong rally off the recent trough, with uninspiring sponsorship but good breadth, reasonable but not strikingly attractive valuations, and an overhang of increasingly distressed mortgage and non-residential debt that looks like Armageddon Part II in the offing, because we are doing nothing to restructure it. In my view, the recent advance looks not like a garden of “green shoots,” but very much like a short-squeeze off of an oversold trough. It would be convenient if such bounces could be predicted in advance, but as we observed last year, the market can become very persistently oversold during bear markets, and even an “oversold” decline can go much deeper until the oversold condition is abruptly cleared.

Fundamentally, my view is that the U.S. economy is on very thin ice, and that by focusing on the bailout of corporate bondholders rather than the restructuring of debt, we are courting the risk of a far deeper downturn. Last year, I didn’t think it was conceivable that policy-makers would attempt to address this problem by making lenders whole with public funds. This is an ethical abomination, putting the public in the position of absorbing the losses that should properly be borne by those who provided capital to these institutions. It is not sustainable. What it does it place the public in the position of losing first, but it will not, and cannot prevent the ultimate failure of the debt – for the simple reason that without restructuring, the debt can’t be serviced.

It is true that insurers, pension funds, and other entities own part of the debt of these financial institutions, but they certainly do not own all of it, and to the extent that it is in the public interest to use public funds to reimburse the losses of various entities, that can and should be part of the political process. But to broadly immunize every bondholder of these institutions with public funds is repulsive. Even the bondholders of Bear Stearns can expect to get 100% of their principal back, with interest.

Aside from the abuse of the public trust inherent in these bailouts, it is also offensive to anybody who devotes a significant portion of their income to charity, because there are so many better uses for trillions of dollars. Think about it. Two of the wealthiest people on earth, Warren Buffett and Bill Gates, after lifetimes of work, will be able to commit a combined total of about $100 billion to charity. But that figure is dwarfed by the amount being allocated to protect corporate bondholders from taking a “haircut” on distressed debt, or swapping a portion of it for equity – both perfectly appropriate ways of compartmentalizing the losses of these financial institutions, without public funds, and without receivership or “nationalization.”

Reds in the Red

Manchester United has increased full-year sales by 22 per cent to £256.2 million, a record for a British football club. That means profits, before interest and taxation, at Red Football Limited, United's immediate parent, rose by 29 per cent to £24.1 million.

The figures cover the 12 months to the end of June last year, taking in the whole of the 2007-08 season, during which United won the Uefa Champions League and, for the tenth time, the Premier League title.

However, once interest payments of £45.5 million were applied, Red Football Limited made a pre-tax loss of £21.4 million — down from a loss of £24.3 million in the previous year.

Meanwhile, Red Football Joint Venture — the vehicle through which Malcolm Glazer, the US tycoon, and his family bought United and which is the club's ultimate parent — reported a pre-tax loss of £44.8 million, mainly because of interest payments. That rose during the period from £604 million to £649.4 million because of the way that interest on “payment in kind” loans continued to roll up. Piks are loans on which no interest is payable until the end of the loan term.

United's turnover was up sharply in all three of its main areas, with matchday receipts rising by 10 per cent to £101.5 million, while commercial income — which takes in merchandising, sponsorship and licensing agreements - rose by 14 per cent to £64.0million. The biggest increase was in TV revenue which, on the strength of United's Champions League triumph, surged 48 per cent to £90.7 million.

The sale of players, including Giuseppe Rossi, Gerard Piqué, Chris Eagles and Gabriel Heinze, boosted profits by £21.8million.

The club made new commercial partners during the year, including Saudi Telecom and Diageo, while existing partnerships with Budweiser, Travelcare and GlaxoSmithKline were renewed.

Tropicana Line's Sales Plunge 20% Post-Rebranding

Interesting article on how a disastrous re-branding of Tropicana's famous "orange with a straw" caused sales to plunge 20% in less than 7 weeks:


from adage.com

NEW YORK (AdAge.com) -- Tropicana's rebranding debacle did more than create a customer-relations fiasco. It hit the brand in the wallet.


The new Tropicana Pure Premium packaging had been on the market less than two months before the company scrapped the redesign.

After its package redesign, sales of the Tropicana Pure Premium line plummeted 20% between Jan. 1 and Feb. 22, costing the brand tens of millions of dollars. On Feb. 23, the company announced it would bow to consumer demand and scrap the new packaging, designed by Peter Arnell. It had been on the market less than two months.

A swift reversal

Now that the numbers are out, it's clear why PepsiCo's Tropicana moved as fast as it did. According to Information Resources Inc., unit sales dropped 20%, while dollar sales decreased 19%, or roughly $33 million, to $137 million between Jan. 1 and Feb. 22. Moreover, several of Tropicana's competitors appear to have benefited from the misstep, notably Minute Maid, Florida's Natural and Tree Ripe. Varieties within each of those brands posted double-digit unit sales increases during the period. Private-label products also saw an increase during the period, in keeping with broader trends in the food and beverage space.

Alan Whicker Island

Many of you will recall Alan Whicker and his famous reports on the rich and famous throughout the 1950's, 60's and 70's.

Here's Monty Python's classic "Whicker" sketch:

9 Billion - The World Population in 2050

At or around the time my kids get to my age, the World Population is likely to have moved from its' present 6.8 bn to over 9.1 bn. Putting it another way, the increase in population will be similar to the global population in 1950!



The data is available here

Pimpthisbum.com.......

Another from freakonomics:

Does panhandling work better through the web? A Houston father and son team thinks so. They gave a homeless man named Timothy Dale Edwards a sign to hold while panhandling; it directed passersby to his website, PimpThisBum.com. In less than two months, the site has garnered $50,000 in pledges and donations. The project’s creators believe its success has to do with the sign’s humor and the faux-tactless domain name.

We’d like to suggest another reason: appeals for money encouraging credit card use are far more effective than appeals calling for cash, according to a recent study

(If you haven't the time to read it, it essentially demonstrates that people will pay more for a product or service with a credit card than when using cash...... )

From freakonomics:

The Fraser Institute is offering a $1,000 top prize for proposals on what economic or public policy issue it should try to measure. More information is here. Submit a brief essay or video with a clear thesis on what should be measured, why it should be measured, and how it might be measured.

China's Way Forward

Interesting article on the current woes and future opportunities in China


China's Way Forward

Idle factories, moored container ships, widespread bankruptcies, massive migration back to the hinterlands, strangely clean air—the signs of depression are everywhere in China. Because it makes so many of the goods the world isn’t buying now, China stands to be worse hit than the rest of the world —just as America was during the Depression, when it was the world’s sweatshop. But like America then, China will use tough times to design innovative products that will get it the high profits and the high-value jobs Americans kept to themselves for decades. And that is very bad news for the United States, unless it uses tough times to reinvent itself, too.

Top of the Gilt/Bond market?

With the UK Gov. failing to successfully auction it's latest issue of long dated bonds (the first time since 1995) and the US treasury forcing the market up with Bernanke's first long dated purchases, does this represent the top of the market?

Bernanke's purchases could be the mirror image of Gordon Brown's decision to sell gold at the bottom of that market in 1999.

Goldman: Quote of the day - “Leopards change spots”

from www.creditwritedowns.com

by Edward Harrison

If you haven’t noticed, I think the Geithner Plan, while far from perfect, has a reasonable chance of success. Marshall, too, believe the plan work as he has suggested in his last post. The optics of it are another matter.

“Goldman has already said they will repay their TARP money within a month (obviously all of this negative press scrutiny is getting to them). Easy enough to do: they’ve had billions funnelled to them via AIG, so they can now take that money and “repay” TARP. Nice circular shell game.

And that’s how the Geithner plan will work as well. They’ll all be bidding for each other’s assets at vastly inflated prices, getting a good “mark” on their books and then they’ll dump the crap with the taxpayer. I actually think the plan will work because it’s officially sanctioned larceny. It’s just like me saying, I could get rich if the government gave me the means to rob banks every time I needed money.

Is this a great country, or what?”

The money quote, however, comes from Thomas Ferguson, a well-known professor at UMass-Boston:

“Leopards change spots with amazing celerity when it pays. By the way, I think the next step is pretty obvious with the banks and the US government this morning. Institutions that get rid of toxic assets thanks to the new Geithner plan will then forthwith pay back their TARP loans. Indeed, if they are confident of their refinancing, then they may do it without participating in the program. That way they escape the constraints, and get money. So much for exec comp issues.

Sort of like the original TARP plan as Paulson and Bernanke hatched it.

How about that for history proceeding in spirals, rather than straight lines?”

An ode about Bernie Madoff

The NY Times ran a competition to come up with a witty verse about Bernie Madoff. Here's my effort:

There once was a fund guy called Bernie,
Whose clients had one hell of a journey
They invested in trust
Found out it was bust
And then they all ended up on a gurney

President Obama on the Tonight Show with Jay Leno

For those unable to watch on TV here's the full interview on video:



The full transcript is available here

US Treasury announces New Currency Design

 

Norway’s krone: the new safe haven currency?

I've not sounded this out with our in-house Scandinavian, but an interesting article from the FT

The Swiss National Bank’s decision to intervene to weaken the franc has left currency investors with one less haven from the financial crisis.

Its move comes at a time when there are also questions surrounding the future haven status of two other leading currencies: the dollar and the yen.

While the dollar has enjoyed a liquidity premium amid the current financial turmoil, many investors expect it to lose its allure as the full impact of large-scale US fiscal and monetary loosening filters through.

Simon Derrick at Bank of New York Mellon says: “The dollar has clearly been supported by haven flows during the current crisis.

“But, in the longer-term, the sheer scale of US fiscal spending and the lack of international capital available to support it represents a direct threat to the dollar’s strength.”

The Swiss franc has been driven lower by the SNB, which last week intervened to sell the currency, saying its recent appreciation represented an unwelcome tightening in monetary conditions.

Meanwhile, the yen has been undermined by a series of data showing a steep downturn in Japan’s export-driven economy.

This has helped stoke expectations that the Bank of Japan will follow the SNB and intervene to weaken its currency.

So where do currency investors turn now? One answer could be Norway.

David Bloom at HSBC says “The ultimate haven currency in our view is the Norwegian krone. “It’s probably the best currency in the world.”

“It’s probably the best currency in the world”

This might seem surprising. Only last December the krone dropped to a record low against the euro, as falling oil prices took their toll on the currency. But, as crude prices have stabilised, the oil producer’s currency has fought back strongly.

Indeed, the krone is one of the few currencies that has outperformed the dollar so far this year, rising more than 3 per cent to NKr6.694. It has soared 11 per cent to NKr10.925 against the euro.

Mr Bloom says: “The Norwegian krone is our preferred major currency and we expect a sustained appreciation over the next 18 months.”

Analysts say on a number of measures, the krone is near or at the top of the league among the world’s 10 most traded currencies.

Norway’s economy grew 1.3 per cent in the fourth quarter of last year and is not forecast to experience as big a downturn as most other leading economies this year.

Monetary policy is also supportive of the krone, with the Norges Bank, Norway’s central bank, like those in other commodity-producing countries such as Australia and New Zealand, not expected to resort to quantitative monetary easing to boost inflation expectations. The country also has a large current account surplus.

The cost of insuring against sovereign default in Norway through credit default swaps is the lowest among the countries with the ten most traded currencies.

Mr Bloom says that if the stock of assets Norway has salted away from its oil revenues in the Government Pension Fund of Norway is added to the mix, the bullish story for the krone is complete.

But some analysts are less glowing about the krone’s prospects.

Gavin Friend at NAB Capital agrees the krone appears one of the best of a bad lot, with a healthy current account balance and interest rates likely to lend it support.

But he says: “You are trying to win the least ugly currency contest at the moment. I can’t disagree that it might move higher, but I can’t get too enthusiastic.”

His main concerns are the lack of liquidity in the market and the krone‘s long-held correlation with oil prices.

“I struggle to see how the Norwegian krone can outperform for a sustained period if oil prices remain low,” he says.

Ashraf Laidi at CMC Markets says the fact that the krone fell against both the dollar and the euro during the turbulence following the collapse of Lehman Brothers in September means it cannot really be called a haven currency.

But he believes that the krone, along with the Australian dollar, is ideally positioned for prolonged gains as risk appetite improves.

He says the Australian dollar represents an economy with a superior growth outlook. The country’s budget surplus is expected to hover at 1 per cent of gross domestic product – which compares with the deepening deficits of the US, Europe and Japan.

He says: “The krone has the upper hand as its structural situation is boosted by a hefty current account surplus standing at 5 per cent of GDP – the biggest in the industrialised world”.

Ship in "beauty dis-advantaged girls" !

I enjoyed this story:

The mayor of an isolated town in Queensland, Australia, was vilified for making the following statement: “May I suggest that if there are five blokes to every girl, we should find out where there are beauty-disadvantaged women and ask them to proceed to Mt. Isa.”

He is simply recognizing that in the dating/marriage markets looks are one of the commodities traded; and there is substantial evidence, for example, here suggesting that uglier women marry men with less human capital, ie men who can earn less. That the mayor is asking ugly women to come to Mt. Isa is just an attempt to get them where their scarcity might allow them to mitigate their “disadvantage” and benefit from the surplus of single men.

Gains from trade of course, make sense, although the mayor’s statement is somewhat crude. Interestingly, the head of the Chamber of Commerce noted that, “There’s a lot of anger circulating among the community… there’s a lot of women voicing their opinions.”

I wonder if the women’s anger is at the mayor’s crudeness, or whether it is a standard response by monopolists who are threatened with competition??

Best Business Blog Award Winner 2008 ( and Cramer v Stewart)

I came across deepcapture.com which won a significant blogging award last year.

It's an interesting site, run by Dr Patrick Byrne and it sells itself as "a work of investigative journalism examining the growing threat to our financial system posed by illegal naked short selling, stock manipulation, and the destruction of public companies."

In the course of reading through its' content, I came across Jim Cramer, who becomes a central character in Dr Byrne's writings.

Jim Cramer is, of course, the star presenter of CNBC's Mad Money . Most recently he's had a series of run-ins with Jon Stewart on The Daily Show, see the video below:

The philanthropist Paul Newman

Paul Newman will always be best known for his work as an actor. But since 1982, he also made his mark as an entrepreneur with his Newman’s Own line of food products. A company that started as a joke between two friends, and never expected to turn a profit, has turned into a fixture in supermarkets around the world. Newman’s Own found its success from accessing a niche market that had been under-serviced. The food products they provide are created with organic ingredients – a strategy which hardly seems revolutionary today, but in the 1980s, was somewhat novel.

In addition Newman discreetly marketed the fact that buying into the Newman’s name would mean that you were contributing to a charity. The novelty of this approach certainly drew some customers in, just as the organic ingredients did. Starting with salad dressing and branching out to a variety of foods, Newman’s Own generated over $250 million in profits in its first two and a half decades.

What makes Newman unique among entrepreneurs is that he then donated all of that wealth to charity. So although Newman was creating wealth, he was not creating it for himself, instead giving it directly to others.

No sign of economic recovery in next 3 or 4 years?

Says Neil Woodford of Invesco Perpetual

Woodford, who runs the £5.3 billion Invesco Perpetual Income and £7.3 billion Invesco Perpetual High Income funds, said he did not believe there were any 'green shoots' around, nor that there would be any in the near future.

He said: 'I think we are in a pretty difficult environment globally and the UK and the US are having a particularly difficult time. The unsual characteristic of this crisis is that it has been running for such a long time and we are unlikely to see any economic recovery soon.'

'My view is that this is going to go a lot longer than the second half of this year. This crisis will encompass a long adjustment...the scale of debt build up is unprecedented. The process of rebalancing the world economy will take many years. We could be in a weak economic environment for three or four years.

'I don't expect to see a sustained growth in this economy or in America for a significant time, three or four years'.

Over the past three years, Woodford has returned -6.1% with the High Income fund and 6.9% with the Invesco Perpetual Income fund while the FTSE All Share TR benchmark fell 27.2% during that period.

From Citywire

Guess where we are now?

I saw the chart below on another website, the author believes we're at the point of anxiety still quite high on the curve.

I believe we're a bit further down, some certainly are still in denial, but most are between fear and desperation......

A snapshot around the world

The owner of Apogee Communications, a California based videogame company decided to ask his global customers how the recession was affecting them, here's some of the responses:

GERMANY: “While everyone is talking about the economic crisis, its direct impact hasn’t arrived here yet. For me, nothing has changed at all.”

SWEDEN: “Living in Gothenburg, the economic crisis has struck the city really hard. Since VOLVO is a big employer here, almost everyone you meet knows someone who has been affected by their cutting back. I see people around me who decided to sell their houses etc. since they can´t afford living there on a reduced salary.”

SPAIN: “In Spain the crisis is being especially intense because a great deal of our economic growth was based on construction. Since getting a mortgage or credit line now is much harder, construction is totally down and unemployment is rising to 20% and above. Fortunately, people around me do not depend directly on construction and no serious effects are seen between friends and family, although everybody is concerned and worried with the unstoppable unemployment rate and the trend is to spend as little money as possible just in case they lose their jobs.”

NORWAY: “Not much has happened here. Those who have stocks have lost half of their money. That’s all. Nobody I know have lost their jobs in Norway. It costs more to rent an apartment than ever. I’m working more than normally in order to prepare for bad days.”

JAPAN: “About the economic crisis, nobody has been laid off within my family or among my friends fortunately, but the owner of an Indian restaurant I go often told me that the economic crisis certainly affected to their business since there are fewer customers after the collapse of Lehman Brothers. On the other hand, there are flash benefits to be paid (12,000 yen) by the government within a month, so my mother for example, is looking forward to buy a Blueray player with it.”

INDONESIA: “People in my local region (Indonesia) are not much affected by the economic crisis that has occurred in USA. The situation is still tolerable and the effects not too significant. We were currently focusing on the political campaigns for the upcoming general election :-)”

POLAND: “My personal view - one with which most people disagree - it that it is mostly panic.”

BRAZIL: “I have a regular job (as a programmer) in an advertising agency. People usually say that when things get rough, the advertising budget is one of the first things to get cut. Not from what I’m experiencing. My agency is acquiring more clients than ever since I’ve been there, and hiring new people all the time. None of my friends are suffering any side effects from the so-called crisis either. My father runs his own thriving business as well, a marina. You’d think that during a crisis people would give up their high-priced luxuries such as boats, but again, that’s not what we observed. He’s been so busy lately with the summer and all that I barely even saw him during these last few months, except for Christmas and New Year’s.”

LATVIA: “Everything’s just peachy. The government resigned last week. The new prime minister just made an announcement on his new government a few hours ago. Inflation rate hit 15.4 % in 2008 and the VAT has been raised to 21% since January 1st. Prices rise so fast you can actually see the difference from one month to another. I guess the economic and financial crisis is everywhere. I miss living in the US.”

RUSSIA: “I am not affected by the local brainwashing mass media. As far as I know, TV broadcast programs or any other mass media sources, including newspapers or radio shows, are trying to blame the US for the crisis (as if the cold war is back again) to distract people from the predicament in Russia - though it’s not a secret to anyone that the inflation rate (not the official number) is over 200% for the past year. … I see prices rising by a ruble for every small article of food every month. … The xenophobic nature, as well as envy of most people make them rebuke others, mostly the US, for the crisis. Which I can understand - people usually are conformists by nature and they repeat whatever they hear from the masses or the mass media. I, personally, blame no one for the crisis, every country had a large role in contributing to it. And I have no doubts that the larger portion might have come from Russia itself.”

source: Apogee Communications

A February Saturday at Holland Park

Jeffrey took some great photographs recently:

Will the swiss sail on QE2 ?

I received this by email from an interesting website www.creditwritedowns.com

Apparently, the Swiss franc is too high — or so says the Swiss central bank. As a result, they are selling francs in the foreign exchange market to get the franc to come down. There has been a lot of speculation about the Swiss and their plans to devalue the Swiss franc, including on this site. It now seems clear that devaluation is where things are headed. Quantitative easing (QE) may be next.

The Swiss are not a member of the Eurozone. They are not even a member of the EU. Like Norway (and Iceland, for that matter), the Swiss are on their own. This has benefits. The Impossible Trinity is a non-sequitur. One can print money and devalue at the heart’s content. The Brits have shown us the power of devaluing a currency from 2.11 per U.S. Dollar to 1.43 per U.S. Dollar. Surely, the Swiss can do the same. In fact, in the case of the Swiss, devaluation would mean that their debtors will be able to repay their loans more easily. I fully expect the Swiss National Bank understands this and is prepared to crank up the presses if they have not begun to do so already.

Just the other day, the Brits started quantitative easing a.k.a. printing money — joining the Americans and the Japanese in plucking bills off the money tree at the central bank.

Who’s next to get on the QE2 - its a lovely ship? Why, Switzerland, of course.

The Swiss franc plunged to its lowest level so far this year on Thursday after the Swiss National Bank said it was set to make purchases in the foreign exchange market to halt the currency’s rise against the euro.

The Swiss franc’s haven status has been heightened by the recent market turmoil and seen it rise 9 per cent on a trade-weighted basis since July and come close to its record high around SFr1.43 against the euro in recent weeks.

The SNB said the Swiss franc’s strength represented an “inappropriate tightening of monetary conditions” as it battled against a sharp deterioration in the Swiss economy.

“In view of this development, the SNB has decided to purchase foreign currency on the foreign exchange market to prevent any further appreciation of the Swiss franc against the euro,” the central bank said.

The central bank said it had implemented its decision, with traders confirming that the SNB had been active in the market.

This represented the first time a major central bank has intervened in the foreign exchange markets since 2004 when the Bank of Japan sought to weaken the yen.

The Swiss franc dropped 3.2 per cent to SFr1.5290 against the euro and dropped 3.7 per cent to $1.1952 against the dollar.

Marc Chandler at Brown Brothers Harriman said even though the SNB’s intervention to weaken the franc was enjoying immediate success, the policy’s longer term prospects were more questionable.

But do the Swiss have any choice? The Swiss are going to do QE too.

“The SNB is certainly next in line for such moves,” said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. “The SNB probably needs to do more. It’s game over for conventional monetary policy.”

When is a pint not a pint?

Answer: In a recession....

Sometimes even the smartest companies do really dumb things....

In the US, Haagen-Daz have reduced the size of their pint of ice cream from 16 oz to 14 oz citing "Over the past few years, the cost of all-natural ingredients, like fresh eggs, top-quality raspberries and Madagascar vanilla, has increased by an average of 25%. The energy required to make and deliver our products has risen in cost as well, despite the recent dip in gasoline prices"

However one company's PR disaster is another's opportunity. Ben and Jerry's stated thus:

"One of our competitors (think funny-sounding European name) recently announced they will be downsizing their pints from 16 to 14 ounces to cover increased ingredient and manufacturing costs and help improve their bottom line," the statement said.
"We understand that in today's hard economic times businesses are feeling the pinch. We also understand that many of you are also feeling the same, and think now more than ever you deserve your full pint of ice cream."

Yes, we're in a depression

Says Richard Posner in his forthcoming book A Failure of Capitalism: The Crisis of ’08 and the Descent Into Depression

Here's a couple of excerpts:

The world’s banking system collapsed last fall, was placed on life support at a cost of some trillions of dollars, and remains comatose. We may be too close to the event to grasp its enormity. A vocabulary rich only in euphemisms calls what has happened to the economy a “recession.” We are well beyond that. We are in the midst of the biggest economic crisis since the Great Depression of the 1930’s. It began as a recession — that is true — in December 2007, though it was not so gentle a downturn that it should have taken almost a year for economists to agree that a recession had begun then. (Economists have become a lagging indicator of our economic troubles.)

That last line about economists is pretty biting, and not very arguable.

Here’s a bit more on Posner’s decision to call the current crisis a depression:

The word itself is taboo in respectable circles, reflecting a kind of magical thinking: if we don’t call the economic crisis a “depression,” it can’t be one. But no one who has lived through the modest downturns in the American economy of recent decades could think them comparable to the present situation. … It is the gravity of the economic downturn, the radicalism of the government’s responses, and the pervading sense of crisis that mark what the economy is going through as a depression.

Reproduced from the freakonomics blog

At a recent dinner party.......

A woman dared to give an opinion......

Liverpool Street Station January 2009

Can anyone spot Emile and John at Liverpool Street?

Blackberry Ad - Effective or not?

This 17 second "viral" ad appeared on youtube at the end of February. In its' first week it had more than 500,000 viewers and appeared on more than 180 blogs.

In my opinion, very effective!

I know you're listening!

This cartoon is from http://www.xkcd.com

Wisdom - Ronald Reagan style

As Ronald Reagan once said

Michael Lewis on Iceland

Demonstrators in front of Iceland’s parliament building, in Reykjavík’s Austurvollur Square, on January 31.
Photographs by Jonas Fredwall Karlsson.

Iceland’s de facto bankruptcy—its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance—resulted from a stunning collective madness.

What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power?

In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown.

by MICHAEL LEWIS April 2009

The full article is here

Knowing your audience.....

A disappointed Coca Cola salesman returns from his Middle East assignment. A friend asked, "Why weren't you successful with the Arabs?" The salesman explained: "When I got posted to the Middle East, I was very confident that I would make a good sales pitch as Cola is virtually unknown there. But, I had a problem I didn't know to speak Arabic. So, I planned to convey the message through three posters...

First poster: A man lying in the hot desert sand...totally exhausted and fainting.
Second poster: The man is drinking our Cola.
Third poster: Our man is now totally refreshed.



And then these posters were pasted all over the place. "Then that should have worked!" said the friend. "It should have!?" said the salesman. "But I didn't realize that Arabs read from right to left!!"

Are we right to demand our kids to work harder?

I'm interested in the whole concept of does hard work bring greater success ? especially amongst children. My natural inclination is to let them find their own level, however, there are times I feel that I'm doing them a disservice and that I should force them to work much harder than they do, in order to maximise their chances of success later in life.

I was impressed but also horrified in equal measure, to learn that Obama's mother had him up at 4.30 most mornings to go through his lessons. The video clip is below:



Elsewhere, Malcolm Gladwell (the author of The Tipping Point and Blink) has written a new book, Outliers, The stories of success.

In the book he describes the success that the Chinese as a race have, in part, is down to the more readily accepted hard work ethic. He quotes a Chinese Proverb:

No one who can rise before dawn 360 days a year fails to make his family rich

He argues that the greater the opportunity for hard work, for example longer school hours and more home study, the greater the opportunities for success later in life.

I'd be interested in anyone's thoughts and comments

Exclusive - first pictures of Gordon Brown leaving for Washington

An excellent Dilbert Cartoon

For our senior readers - if it's too small to read click on the image to expand it!

A prophecy from 1867

Familiar as we all are with the works of Karl Marx, I am indebted to Mattias for forwarding this timely prophecy from Das Kapital written in 1867:

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable.

The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism

Quantifying the Nightmare Scenarios

From freakonomics - one of my favourite websites:

Quantifying the Nightmare Scenarios
By Eric Zitzewitz


There’s no shortage of fear about the economy. But just how fearful should we be? Perhaps financial markets can provide some guidance.

There’s a neat mathematical trick, by which we can use option prices to quantify the probability of the stock market falling by various amounts. Breeden and Litzenberger (1978) show that by comparing the prices of options at adjacent strike prices, you can calculate the approximate value of securities that would pay $1 if the underlying stock traded in a certain range on expiry day.

(Economists know these as Arrow-Debreu securities; they approximate what option traders call “butterfly spreads” when strike prices are close together.)

“Option prices suggest that there is a very real chance of, dare I write it, another Great Depression.”

For example, using last Friday’s options prices, we can calculate that it would cost 10 cents to buy a portfolio of options that pays $1 if the S&P 500 falls below 250 on December 18, 2010. If markets were risk-neutral (I’ll come back to this), we could infer that the market thought there was a 10 percent probability that the value of U.S. stocks could fall to one-third their current value by the end of next year. Such a drop would leave the index down to one-sixth of its peak level in late 2007. By way of comparison, in the Great Depression the value of stocks fell to between one-sixth and one-seventh of their earlier values.

Here is a graph of the probability distribution for the value of the S&P 500 in December 2010 — as implied by the options markets. The red line uses option prices from the end of September 2008 (after Lehman’s collapse); the blue line uses prices from Friday. As you can see, the probability of a substantial drop in the value of stocks has moved from relatively remote to quite substantial. Not only has the distribution shifted to the left, but the left tail has gotten thicker, suggesting there’s much more concern about extremely bad outcomes. (The dashed line indicates where I have used the pricing of the last two options to infer prices of options that are further out of the money.)




This graph yields a pretty interesting story. The most likely scenario is the S&P 500 ends in 2010 between 800 and 1,000, which is up 5 percent to 30 percent from today. But today’s market is being held down by the prospect of a Depression-like decline in stocks.

What do these bad-news scenarios look like? Surely the value of financial firms would be zero, but as these are only around 10 percent of today’s index, the dismal outcomes must be more widespread. Profits would have to fall significantly, with little hope of medium-term recovery. Such a decline in profits would go hand in hand with a sustained decline in incomes across all sectors.

There’s an important caveat to all this. Even when the market price of a bundle of options paying $1 if “the S&P 500 is below 250 in December 2010″ costs 10 cents, we cannot infer that there’s a 10 percent chance of this happening. Since this security would help hedge against extreme wealth losses, investors should be willing to pay an insurance premium. Furthermore, the investors buying these securities could be panicking and overpaying for them, and the more sanguine may be unable to offset this fear if their money is tied up elsewhere.

Regardless of whether it reflects risk aversion, panic, or a true probability, the 10 cent price being paid for a dollar of Depression insurance highlights the fears that are holding stocks down. Policymakers have been trying to reassure investors that they understand the risks of depression and will do what is needed to avoid them. These graphs provide a measure of how far they have to go in convincing us.

Will Social Networks On the Web Ever Make Money?

Well perhaps this blog might!

Interesting article from Forbes, about the ability (or not) of Facebook, Linkedin, Twitter etc to turn their fast number of users into cash generators.

In the last week or so, there have been a number of events that bring up the big question: Will Web-based social networks ever become significant businesses? Or, put another way: Do these social networks--Twitter, Facebook, LinkedIn, MySpace--have the ability to "monetize" their audiences?

My answer: While today, these may not look like great businesses (which hasn't stopped investors' willingness to fund them), I'm convinced that the daily interactions of their vast memberships--and their users' willingness to share their interests, tastes, relationships and intentions, and the massive amounts of data around users' behavior--will eventually lead to substantial revenues and profits. But I don't think that those revenues will come just from the Web advertising standards of banners and contextual search links.

New recruit for our Saturdays?

This is Madin Mohamed, a 6 year old who already has many European clubs following him. No need to guess who would win the trophy each week if he joined us!

Black Swans in Holland Park?

Has anyone read the various works of Nassim Nicholas Taleb?

I just bought The Black Swan, Impact of the Highly Improbable, and retrospectively makes fascinating reading.....

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crises less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.

His website is here

Can a 9 month old entain him/herself for two hours?

Interesting time lapse video:

At the edge of Victoria Falls

Some may recall Hardy's  Christmas trip and his visit to the Victoria Falls with his family.

Please note who is furthest from the edge!

Continuing the skiing theme....

Hardy and Mattias got together one evening before dinner in Lech, kindly sending me photographic evidence:

Mattias Skiing (2)

Word from Mattias and family is that the snow conditions in Lech are currently the best in living memory, so here's a short video of Mattias bashing some powder last week:

Disorder in the American Courts !

Thanks to Mattias:

 ATTORNEY: What was the first thing your husband said to you that morning?
WITNESS: He said, "Where am I, Cathy?"
ATTORNEY: And why did that upset you?
WITNESS: My name is Susan!

.................................................


ATTORNEY: Are you sexually active?
WITNESS: No, I just lie there.

.................................................



ATTORNEY: Now doctor, isn't it true that when a person dies in his sleep, he doesn't know about it until the next morning?
WITNESS: Did you actually pass the bar exam?

.................................................

ATTORNEY: The youngest son, the twenty-year-old, how old is he?
WITNESS: He's twenty, much like your IQ.

.................................................

ATTORNEY: Were you present when your picture was taken?
WITNESS: Are you shitting me?

.................................................

ATTORNEY: So the date of conception (of the baby) was August 8th?
WITNESS: Yes.
ATTORNEY: And what were you doing at that time?
WITNESS: Getting laid.

.................................................

ATTORNEY: She had three children, right?
WITNESS: Yes.
ATTORNEY: How many were boys?
WITNESS: None.
ATTORNEY: Were there any girls?
WITNESS: Your Honor, I think I need a different attorney. Can I get a new attorney?

.................................................

ATTORNEY: How was your first marriage terminated?
WITNESS: By death.
ATTORNEY: And by whose death was it terminated?
WITNESS: Take a guess.

.................................................

ATTORNEY: Can you describe the individual?
WITNESS: He was about medium height and had a beard.
ATTORNEY: Was this a male or a female?
WITNESS: Unless the Circus was in town I'm going with male.

.................................................

ATTORNEY: Is your appearance here this morning pursuant to a deposition notice which I sent to your attorney?
WITNESS: No, this is how I dress when I go to work.

.................................................

ATTORNEY: Doctor, how many of your autopsies have you performed on dead people?
WITNESS: All of them. The live ones put up too much of a fight.

.................................................

ATTORNEY: ALL your responses MUST be oral, OK? What school did you go to?
WITNESS: Oral.

.................................................

ATTORNEY: Do you recall the time that you examined the body?
WITNESS: The autopsy started around 8:30 p.m.
ATTORNEY: And Mr. Denton was dead at the time?
WITNESS: If not, he was by the time I finished.

.................................................

ATTORNEY: Are you qualified to give a urine sample?
WITNESS: Are you qualified to ask that question?

.................................................

And the best for last:

ATTORNEY: Doctor, before you performed the autopsy, did you check for a pulse?
WITNESS: No.
ATTORNEY: Did you check for blood pressure?
WITNESS: No.
ATTORNEY: Did you check for breathing?
WITNESS: No.
ATTORNEY: So, then it is possible that the patient was alive when you began the autopsy?
WITNESS: No.
ATTORNEY: How can you be so sure, Doctor?
WITNESS: Because his brain was sitting on my desk in a jar.
ATTORNEY: I see, but could the patient have still been alive, nevertheless?
WITNESS: Yes, it is possible that he could have been alive and practicing law. 

Snow Forecasts for half term

Up to date snow forecasts for Lech and Cortina (others on request)

Lech:

Lech Snow Forecast | Snow Report | by E-mail

Cortina d'Ampezzo:

Cortina d`Ampezzo Snow Forecast | Snow Report | by E-mail

Giancarlo at the 2007 Champions League Final (3)

Dida waited patiently for his photo opportunity:

Giancarlo at the 2007 Champions League Final (2)

No end of Milan players and Prime Ministers queued up to have their photo taken with Giancarlo:

Berlusconi




Filippo Inzaghi:

At long last perhaps the luxury goods market will have to obey normal laws of economics.

From an economic point of view the luxury goods market has always fascinated me. I could never, and still don't understand the prices they have commanded for their goods for years, and the willingness of intelligent consumers to go along with their game.

I have argued for some time that the luxury goods market is completely unsustainable. At last I found an article that mirrors my own thoughts.




From The Wall Street Journal

When Saks Fifth Avenue slashed prices by 70% on designer clothes before the holiday season even began, shoppers stampeded. "It was like the running of the bulls," says Kathryn Finney, who says she was knocked to the floor in New York's flagship store by someone lunging for a pair of $535 Manolo Blahnik shoes going for $160.


Saks's deep, mid-November markdowns were the first tug on a thread that's now unraveling long-established rules of the luxury-goods industry. The changes are bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are trying to sell.

The problem Saks faced last November is one that haunts the U.S. economy as a whole: From car makers to home builders, companies are stuck with inventories that are far too fat. (See related article.)

Saks's risky price-cut strategy was to be one of the first to discount deeply, rather than one of the last. Managing high-fashion inventory is tricky. Clothing can go out of style in just months, so stores don't want to keep it around. But cut prices too soon or too deeply, and shoppers start to expect it.

Stephen I. Sadove, Saks's chief executive, says his action helped his company avoid massive losses, or worse. "These herculean things," including slashing inventories, were done to "make sure that the company survives," Mr. Sadove said in an interview.

Article


Of course, the worrying thing is that if you slash the price of a handbag by 70%, it might encourage my wife to buy three instead of one!

Giancarlo at the 2007 Champions League Final

The Milan boys and Berlusconi were invited to meet with Giancarlo after winning the Champions League Final 2-1 against Liverpool in Athens. He kindly agreed to having a couple of photographs taken.

Alessandro's wife driving!

Alessandro kindly sent this video of his wife driving the many cars they've had!

agm live

"At times the orderly conduct of the meeting was threatened"

Minutes of the 2009 AGM

1. Apologies

Apologies received and accepted from Osman, Giancarlo, Jeffrey and Romain.

2. Minutes of last meeting

Accepted as a true and accurate record.

3. Matters arising

It was noted by the current Social Secretary that the venue and facilities for this years AGM were superior to the previous.

4. Re-election of Officers

By a show of hands the President, Chairman and Social Secretary were unanimously re-elected.

5. Special Thanks

Special thanks were noted for the original support offered by Stefan who sadly was unable to attend this years meeting.

6. Any other business

Many items were discussed and at the sole discretion of the Chairman were excluded from the minutes of the meeting.

Off the record briefings to interested parties will take place on Saturday morning.

7. Note from Chairman

Once again gentlemen it has been a huge pleasure to have your company throughout the last 12 months. I look forward to the next year being equally rewarding for us all.

8. Meeting closed in a orderly fashion a little after mid-night.

At last something we can all take advantage of......

from freakanomics :

Simon Rogers moved to New York from London when he was 28 to begin his modeling career. About two years ago, he created UglyNY, a talent and modeling agency affiliated with Ugly in London, which is run by a friend. You’ll see photos of his clients throughout the rest of this post.

As Rogers once told The New York Times, UglyNY serves the market for “great-looking people, people who’ve really been hit with the ugly stick, and everything in between.” UglyNY’s recent clients include Clairol, Walmart, and Vanity Fair. Demand for “real people,” Rogers says, is growing — in part because of the influences of reality TV, MySpace, etc. Plus they are often cheaper.

Chicago Economists on the US Stimulus Package

I cut and pasted the following (from here), as I thought it was interesting, and might stimulate some further debate:

Chicago Economists on the Stimulus Package


By STEVEN D. LEVITT

A panel of Chicago economists convened to discuss their views on the stimulus package recently, and video of the event is now available online. All the speakers had something interesting to say (including Nobel Laureate Robert Lucas being surprisingly sympathetic to government intervention).

Of particular interest, in my opinion, is Kevin Murphy’s discussion, which comes in the middle of the video  . (If you don’t have the patience for watching video, you can just look at Murphy’s PowerPoints.) It is vintage Kevin Murphy. He says that he can’t remember much from his macroeconomics courses, so he starts over from scratch and creates a perfect framework for thinking about how one should evaluate the case for stimulus.

What he comes up with seems totally obvious once he presents it, and yet I have never seen anyone discuss the issue in a manner even remotely similar to this. That is the mark of true genius.

I have only one thing to add to the panel’s discussion. Throughout the video, you will see that the speakers operate under the assumption that the economists who are advocating stimulus are doing so based on an economic analysis. For instance, Murphy says things like “Christina Romer [the head of the Council of Economic Advisers] must believe that the deadweight loss of taxation is very small.”

A very plausible alternative hypothesis is that the justifications being put forth for the stimulus package — even if those doing the justifying are economists — are based on politics, not economics.

The obligatory "London in the snow" pictures

It has to be done, I'm afraid, the kids had a fantastic day playing in the gardens all day long. So if you struggled all day to get to the office, only to leave early as none of your clients were in anyway, here's what South Kensington looked like this morning:





One last thought, if the same conditions prevail tomorrow, take the day off and play with the kids in the snow - the memories will last a lifetime, and the next time it happens in London maybe, our kids will be playing with their kids!

Monty Python - Merchant Banker Sketch

Fed up with piracy, the surviving members of Monty Python decided to put up their best material free on You Tube with a link to Amazon for DVD purchases. The result is a 23,000 % increase in sales - amazing.

Here's a favourite and quite topical sketch.

Snow-boarding the Hardy way!!

The George bush season continues!!

Exclusive footage of Mattias and Emile celebrating the exam results!!

For some bizarre reason the embedded video destroys the blog template, so please click on the link below, well worth it!

http://www.grapheine.com/bombaytv/index.php?module=see&lang=uk&code=df4bc7b348c2a87810d0be71d3520dc0

Probably the greatest goalscorer ever.

Dixie Dean played for Everton for 12 years, 1925 to 1937, and in total scored 383 goals in 433 games, a record never likely to be broken. In 1927/8 he scored 60 goals in one season. He was also the perfect gentleman and was never booked nor sent off throughout his career.

He was a good friend of my Grandfather's, and they often used to share a bus on the way to the game....

Not much footage exists of him playing sadly, but there are a few small pieces:

A genuinely funny G W Bush video

Skiing with Mattias

Great Ski Jump - Funny bloopers are a click away

The end of the Wall Street Boom - Michael Lewis

This is the article by Michael Lewis first circulated by Hardy





The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

 The end of the Wall Street Boom - Michael Lewis

Not our Osman but Dan Osman........

Dan Osman was an Asian American extreme sport practitioner, known for the dangerous sports of "free-soloing" (rock climbing without ropes or other safety gear); and "rope jumping" (falling several hundred feet from a cliff then being caught by a safety rope), for which his record was over 1000 feet / 304.8 meters

Kaka's Greatest Goals

Just for you Giancarlo !

Now he's gone, we'll miss him.....

Remi Gaillard - another video!

Reminder - date for diary

Looking forward to seeing you all on Saturday, usual time, perhaps a bigger attendance this week?

Just to remind you that there is an evening "The AGM" planned for Thursday 5th February.

Location details to follow by email.

Caspar was delighted that his hero Tim Cahill scored on Monday evening to equalise against Liverpool - expect more on Saturday

Saturday Football

Hi everyone, this is the blog for all those Dad's and their kids that get together on Saturday mornings for football  and friendly chat amongst the Dads.

Over the last few years good friendships have formed, and such is the wealth of information, tips, Adrian's money-saving ideas etc that we needed a space to publish them!

This is that space. As with any publication, it will only ever be as good as its' content, so feel free to publish or comment on any thing written here.

In addition of course, we will be following the football each week, with photos, commentary and the player of the week.

Enjoy!