Tuesday, January 22, 2008

Oh Happy Happy Crash

Wonderful, the markets have finally crashed. I was expecting this six months ago, but, for some reason, this particular phase of financial bullshit and delusion has lasted slightly longer than most. The crash is good because, unlike the other 'we've beaten the market' scams that I can remember, this one seemed unusually nasty and damaging. Certainly a lot of 'real world' people will suffer as a result. For myself, I can look forward to decent restaurants being restored to their former glory and mega-baby-buggies ceasing to clog up Notting Hill cafes as hedge funds evaporate, private equities collapse and international bankers sod off back to where they belong, leaving London to delightful Polish builders and waitresses and writers of thoughtful essays on the burning issues of the day. My record on forecasting is poor, but everybody needs a dream. 
Posted by Bryan Appleyard at 9:28 am

13 comments:

  1. Neil ForsythJanuary 22, 2008 10:15 am

    Does a world recession spell the end for property programmes? I hope so. Apart from Grand Designs, which I consider high quality property porn.

    If so, I suppose they will be replaced with a new raft of fly on the wall DIY disaster/makeover docusoaps. Heaven help us.

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  2. AnonymousJanuary 22, 2008 10:42 am

    Oh Bryan. I fear you will be disappointed. Plenty of hedge funds have made squillions from our recent difficulties. As for Private Equity, the crash represents an opportunity rather than a disaster: their success tends to depend on when they buy assets, not sell. Admittedly those who have bought in the last 18 months might find it hard to make a return, but most will. As for those who buy in the next 18 months, I think they will do very nicely thank you.

    And what are you doing in Notting Hill in any case? Come down to Kensington, then you'll really have people to complain about.

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  3. NigeJanuary 22, 2008 11:36 am

    He is in Kensington, Recusant - he's just in denial about it.

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  4. AnonymousJanuary 22, 2008 12:22 pm

    Thanks for the intelligence Nige. I will ensure that I wear my special 'I'm not a Hedgie nor in Private Equity' outfit. Wouldn't want to enrage an Appleyard without meaning to.

    Still, I have the advantage. I know what he looks like. Or at least I think I do.

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  5. Bryan AppleyardJanuary 22, 2008 12:33 pm

    I am in Kensington because of a mere technicality. No sane person would describe this as anything other than Notting Hill. And, Recusant, damn, I knew they'd have some new scam.

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  6. AnonymousJanuary 22, 2008 2:20 pm

    Now I realise that I could be driving people away from here by my excessive parochialism, but how can you be in Kensington on a mere technicality, but really in Notting Hill. We're not just talking about being in the RBK&C are we?

    Can I pop round for some sugar later?

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  7. AnonymousJanuary 22, 2008 2:59 pm

    Crash! And the feds just cut the interest rates again: Good for our home equity line of credit; bad for our meager retirement fund.

    At least I see that absinthe is now purchasable again in the U.S. I sorta think absinthe and financial misery go together -- I'm very tempted to discover what Toulouse Lautrec knew.

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  8. AnonymousJanuary 22, 2008 8:36 pm

    I'm very tempted to discover what Toulouse Lautrec knew

    Premature death? Be careful, Susan. We'd miss you ;-) BTW, I noticed this morning that the average 30-year fixed mortgage rate is about 5.25%.

    Bryan, I know financial markets were your beat for years so I respect your opinion, but we are still above the 52-week low here in the US, so I'm not so sure the crash is upon is here. Besides, a deeper than expected U.S. recession appears to be on the way (and I'm an optimist). Maybe tomorrow.

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  9. AnonymousJanuary 22, 2008 11:02 pm

    Randy and Bryan: What do you think of Bush's plan to hand out tax rebates to stimulate the economy? I think it's crazy -- we're already spending billions in Iraq -- and it also looks like the people who most need the dough (low income working families) don't pay enough in taxes to get it.

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  10. AnonymousJanuary 22, 2008 11:33 pm

    Susan - Most economists I've read say it won't work, but there is huge bipartisan support for it (all the major Pres. candidates have signed on to the idea if not the details). Handing out up to $800 to every taxpayer in the country looks like a real vote-winner. Those who don't pay taxes get EIC's and EIC's are refundable and spendable. In fact, low income earners are exactly those who the money is really directed at because they are least likely to hoard it. If really we do all spend the money, the economy might not tank. If the economists I've run across are right, we'll squirrel away 75% of it (because we know that's never going to happen again) and the 25% spent will make no big difference.

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  11. AnonymousJanuary 23, 2008 1:31 pm

    Susan,

    US Budget deficit for 06 was 1.9% of GDP and for 07 is expected to be 1.2%. Projections for 08 were 1.1%. Would that any European economy could boast such figures. The US can easily afford a fiscal stimulus and indeed should do so, as fiscal policy is meant to be used as a counter-cyclical
    economic influence.

    http://www.cbo.gov/budget/data/budproj.pdf

    Regards, a Notting Hill dwelling investment banker

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  12. AnonymousJanuary 24, 2008 6:09 am

    Susan: Here's an excellent summation of the various stimulus plans. Note that your favorite candidate, Obama gets the best grade (and for good reason IMO), primarily because he grants credits to non-taxpayers.

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  13. AnonymousJanuary 24, 2008 3:20 pm

    Thanks, guys!

    ReplyDelete

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