A little humour

From David Colquhoun's excellent dcscience.net:

"VENTURE CAPITALISM – AN ICELANDIC CORPORATION

You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

You sell one cow to buy a new president of the United States, leaving you with nine cows.

No balance sheet provided with the release. The public then buys your bull."

UK housing still heavily overpriced?

Mike Shedlock discusses a recent international survey of housing affordability, and where the UK is concerned he notes:

Housing in the United Kingdom remains severely unaffordable, with a Median Multiple of 5.1, well above the historic maximum norm of 3.0.

This suggests that if prices returned to their long-term relationship with income, houses would lose 40%-plus of their current valuation. Yes, the housing market varies around the country, but "The United Kingdom had no affordable markets and no moderately unaffordable markets."

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

Gold: NOT a no-brainer choice this time? The Chinese may not agree...

Australian blogger The Contrarian Investor points out differences between now and the 1930s that mean gold is merely another speculative investment, not the sure-fire winner it was then.

Having said that, there is a strong psychological / political / historical / economic strand in gold, and it is significant that central banks are now net purchasers. And China recently announced its intention to increase holdings from 1,000 tonnes to 6 or 10 times that over the next decade, having already boosted them from a level of 600 tonnes in 2003. China is now the world's largest producer of mined gold.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

The Brits are dumber than the Yanks; and Keynes will always beat Hayek

Shakespeare's plays imply a great deal about his audience, and so does the video below (hat-tip to Nathan Martin). I have not seen material like this made by and for the British market. Why not?

Economists are still warbling the lays of the free market, but I haven't seen them explain how Western prices and incomes can dwindle on the global market when our debt is huge and fixed. I think the best we can hope for is to manage our fall in average living standards, so that it happens more slowly.



DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

Investors to turn from the US to emerging markets?

Last October, James Quinn, senior director of strategic planning at The Wharton School of University of Pennsylvania, reviewed the US as an economy in which to invest, and he concludes:

An aging country dependent upon oil and debt for sustenance is not the ideal place to invest, and that may be the conclusion that many come to, giving a boost to emerging economies. Domestically, technology – including medical technology - and alternative energy look to provide the best chance for the United States to regain some of its lost prosperity, and therefore are potential areas of focus for investors.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

UK GDP and forcing the money supply: flogging a dead horse?

A few days ago, I charted the relationship between GDP and the money supply as measured by M4 (bank lending to the private sector). We now hear that estimated GDP for 2009 was negative 4.8% (the worst since 1921) and the Bank of England's website shows bank lending grew in the first 3 quarters of 2009 by 5.1% annualised.

The BoE's figures for M4 only go back to the spring of 1963, and in all the time since then GDP has never been negative, yet with all this stimulus (and the enormous central bank quantitative easing that forced it) it still fell, so who knows what might have happened without it.

It seems to me that the doctor has been disguising the symptoms, and the illness still has a long way to run.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

If only

If only Judge Judy could be asking the questions at the Chilcot Enquiry today.

"Don't bother me with this nonsense."
"Are you on medication?"
"Speak not!"
"I don't believe you."
"That's not what I asked you, sir."
"I don't give a rat's tutu for your pain and suffering."
"Baloney!"
"On my worst day, I'm smarter than you on your best day."
"What you have said doesn't make sense, and I'll tell you why."
"Quiet! When my lips start to move, your lips stop."
"Are you chewing gum?"
"Stop messing with your papers. Look into my eyes, that's how I know if you're telling me the truth."
"Is English your primary language, sir?"
"They don't pay me enough for this." (Bert, quietly: "Oh, yes, they do.")
"Goodbye, have a nice life."

Oh, if only...