See you there

I do get it. It is a filtered version of the internet.
More than that. A real-time-filtered version of the internet. You’ll get links from people you chose to follow almost real time.

Brilliant. In fact, I keep twittering here.

Will it scale? Is it “monetizable” as it scales? That’s the 500 million dollar question… Which, I believe, Facebook never bothered to ask before making its alleged  bid for Twitter.

As far as I can see it doesn’t. A real time search on the messages posted on Twitter is an unbelievably attractive proposition. Both from a user point of view as a businessman. Boatloads of money there.
Unfortunately in order to have the amount of content Twitter needs to, to be really useful/useful, it needs to add a lot more users. In order to make the content generated by those users profitable (ie searchable in real time through a sort of referrals program (this is where I think it will go)) it needs a lot more infrastructure, more than Google has now, which means money. It’s a wild goose chase for me.

One final note.
In the past week I’ve seen three friends explaining to acquaintances why Twitter was useful. Perfectly acceptable.
However the simple fact that you had to explain it makes it a not-so-attractive proposition for me. It has its niche and I’m sure it will keep growing. Not sure it will ever reach the 150 million users of Facebook  , it’s just not as familiar a concept as Fb is to most people.

One more thing. Just this last concept was so long that I never could have twittered it.

Let me elaborate. Both Gordon Brown and Barack Obama have been calling for countries all over the world to avoid resorting to protectionist measures while restricting or closing altogether their own high skilled migrants program.

So why am I saying that greed will save us? Very simple. There’s still a lot cash-rich companies out there, and now they are out for blood, figuratively.
Solid businesses are dirt cheap as all the markets slump ever further down.
ITV is the perfect example of this phenomena at the moment.

With the broadcaster in dire straits Mediaset, the Italian conglomerate owned by mr Berlusconi, is toying with the idea of acquiring ITV.

There you go. Gordon Brown doesn’t want to give VISAs out anymore. An Italian company buys the biggest private broadcaster in the UK.

Government intervention seem to have turned the rules of the Market upside down.

Lloyds TSB just reported profits for the year of roughly 300 million pounds. Guess where the shares are going, that’s right, down. Admittedly this is a big drop in profits compared to last year, however it’s a brilliant result compared to RBS’s 30 billion loss. Guess how rbs shares fared. They went up. That’s because the UK government promised additional money.

This is not how a healthy market should behave. Nor it is how capitalism can be “fixed”.

I’ll steer clear of financials for a while still.

Wired has compiled a list of the technological breakthroughs of 2008. Apparently one of them is edible chips (as in computer chips).

Did you ever think that one day you were going to say “Mate, I’m sh***ing chips. Literally”. I wonder what else the future holds for us.

Very soon we’ll need archeologist to tell us what was going on just last year. Flying donkeys or pigs would already be a reality if only scientists thought they could be useful in some way.

The question is, for how long?

In an article in today’s International Herald Tribune Thomas L. Friedman discusses the prospect for China now that western markets have woken up and are “on the credit wagon”.

From the article - Stephen Roach, the chairman of Morgan Stanley Asia, Americans

“the most overextended consumer in world history” – can no longer buy so many Chinese exports. We need to save more, invest more, consume less and throw out most of our credit cards. But as that happens, we need China to take our discarded credit cards and distribute them to its own people so they can buy more of what China produces and more imports from the rest of the world.

The ruling communist party in China has been able to remain in power whilst overseeing an aggressive economic growth simply by promising ever-improving living standards – and delivering – without implementing any real change.

The spending binge US consumers went onto was also fueled by the Chinese willingness to hold on US dollars and treasury bills – thus allowing US interest rates to remain low therefore credit cheap for consumers.

The good times are over.

With this post I want to make a political point rather than an economic one.

As the article says Chinese have to pick up our over-stretched credit cards and start spending themselves. Otherwise it all falls down.
Will it happen? No. Borrowing is just not part of Chinese culture – and it’s not going to change any time soon.

As it’s been proved time and again, a recession, or a general decline of living standards, brings out the worst in us, which in turn means (often) civil unrest. People have to find something or somebody to vent their anger at. The government is the easiest option.
Immigrants are an even easier one (I suppose there’s no helping ignorance and stupidity), but there’s not much of that in China.

Businesses have already been going belly-up (quietly) in China for a while. The moment the tipping point is reached the Communist party will find itself in a rough spot.
This, as far as I’m concerned, as been long coming in China, this recession will simply help things along.

Personally, I’ll try to stay away from Chinese stocks during 2009.

Japan is the classic example.
As the country slides in a deeper recession its biggest companies are slashing their forcast and already announcing losses – See Toyota and Honda.

Had the internal market been their biggest then a simple slash of base interest rate would have probably sufficed. Now however both Toyota and Honda need to sell their cars abroad, especially in Europe and the US.

Cutting interest rates is good and well but you have to consider the drawbacks. More and more people are likely to start borrowing in your currency thus driving up its value. That is not good for exports. (chart attached is exchange rate between Yen and US Dollar)

Will we see more exchange rates being tied to another currency? Will it be Euro or USD?

Italy, like many other countries, is having considerable difficulties in raising capital. IOU are not what they used to be with the credit markets in this conditions. Furthermore the low ratings mean that Italy’s bonds offer much higher yield than other countries’.
This coupled with high national debt and a deep and long recession looming over our heads is the perfect recipe for disaster. disaster here being bankruptcy.

Presently the yield on Italy’s ten year bonds is about 144pt. That is a tall order, especially for a country whose economy has been weak ever since I can remember and doesn’t look to be going anywhere in the near future.

Where is Italy going to find the dough to pay.

What a recession brings, shallow though as they claim it will be (at least in Italy), is a decrease in tax revenue – worse still is Italians habit of dodging taxes in ways you can’t even imagine. Italy’s previous government worked hard to increase tax revenue. As usual, it did not manage to hold on to power long enough, to prove that its laws actually worked and it wasn’t only a one-off scare that convinced Italians to cough-up.

Bankruptcy is very real, and just behind the corner if 2009 turns out to be as bad as economists predict.

If the s**t hits the proverbial fan will the EU be ready to bail out Italy? Or rather, can the EU afford to let one of its biggest countries (population-wise) to go tits-up?

I don’t think so. My bet is on the bail-out option.
This considered those bonds look pretty inviting.

Britain’s stock market regulator on Thursday banned short selling in financial companies and said it might extend the ban to other sectors. The move followed the Securities and Exchange Commission’s curbs on the practice that went into effect Thursday morning. [MarketWatch]

Yes indeed. Regulators are moving to temporarily ban short-selling. This sparked a heated discussion in Covestor London office this morning.
Some of us were all for it and thought this would restore confidence and give stricken institutions time to scramble for safety.

I, on the other hand, have serious doubts about the efficacy of such a move. It looks like regulators are trying to buy some more time for themselves rather than curing these ill-markets. To pick up the sinking ship analogy I’d say the captain has banned lifeboats for a short time – The ship will still sink and passengers will jump on the lifeboats as soon as they are available.

Every journalist seems to be raving about how this proves that financial markets are not, as we always thought, self-regulating. Alan Greenspan has indeed vouched this view.
I don’t agree. I think this is the perfect example of a market environment regulating itself. Which doesn’t mean that what is happening is the best possible outcome. Admittedly the market seems to be day-trading on itself. Large institution collapsing under the weight of their mistakes is probably for the best this week but certainly won’t help in the long term.

So the market is self-regulating, but needs wise watchdogs looking over it should it stray off course. This presumes some far-sightedness from the regulators, something we have not seen in the past few years.

Lehman Brothers made colossal mistakes and completely mismanaged the amount of risk it could take on. Don’t give me tearful speeches about smart bankers because if you’re stupid enough to become the biggest underwriter of mortgage backed securities on the assumption that the market will always go up you probably aren’t as smart as you think you are. Quite a mouthful.
On the other hand there’s banks out there which don’t deserve this doom.

Outstanding example of this are Goldman Sachs and Morgan Stanley. They now find themselves in trouble, or at least under pressure, despite being some of the best run institutions. Being caught in the middle of the storm is not a pleasant position and probably, if left to its own devices, the “market” would see to it that they go titsup even though they clearly don’t deserve it.
Facing two crisis at the same time, notwithstanding the fact that they are causally related, seem to denote a certain amount of synchronicity in the markets.

Now to come back to the subject matter. Why am I against the ban of short selling.
I agree with my colleagues when they say that we have to restore confidence in the markets. However, the loss of confidence we’re seeing is not just a random cycle in response to made up news but rather a reaction to structural problems affecting the system.

A ban on short selling will simply create a artificial stability without solving the underlying issues. It may buy some time but as soon as the ban is lifted we will be back to square one. Banks are treading on a knife-edge and no matter how much time you give them it won’t be enough to build strong-enough cash positions to survive another decrease in deal-flow.
Propping up a crumbling building with wooden buttresses will hold only for so long. Something has got to give.

Perhaps then the regulators are banking on the renowned slow-wittedness of the “mob” and hoping memories of this crisis will fade away in a very short period. I don’t buy into it. Bulls will be back in their time. This is a short sellers market.

Different and more radical intervention is required on their (regulators) part. Now we could talk hours about the potentially disruptive effect of over-regulating regulators. But I’ll just save that for another post.

The picture embedded here comes from my first photo-shoot. The light was dark and moody on purpose – what I didn’t consider was that my camera, despite being set to fully manual mode, would change the ISO sensitivity settings without alerting me.

First lesson learned. Always check the first few “test” pictures on your computer screen or somewhere big enough for imperfections to be noticable.

Second lesson – there’s no point in shooting aimlessly thousands of pictures without thinking any shot through.
Make sure you have an idea of what you want to do.
Your model is giving you hours of her/his precious time, don’t waste it just hoping that one of the thousands of shots will come out right. Think your photo through, take 10 shots of the empty background to make sure you have all the settings and lighting perfectly set up, then take the real photo.

A framed version of the picture is available to buy here.

Comments, critiques and suggestions really appreciated.