We all know the role played by the vendor financing feedback loop of hell in dotcom bubble mark 1. Quickly summarised, tech equipment suppliers became overly dependent on sales to internet startups funded through vendor financing, a situation which saw them lending money to companies with dubious track-records for the purpose of buying equipment directly back from them. It didn’t end well. Nevertheless, it’s still a model replicated on a consumer level in the west, whether it’s through car company lending money to customers so that they can buy their cars or sofa company loans for purchases of sofas.
After a half-century with the FT, Sir Samuel Brittan retired last week, signing off with a valedictory essay and video chat. I was new to journalism when a friend bought for me Against the Flow, a collection of Brittan’s essays published in 2005. My friend thought I might enjoy the book based on an enthusiastic review in The Economist, which proclaimed it “so good that rivals in the field will, like this reviewer, put it down not knowing whether to feel inspiration or despair”.
The Wu-Tang Clan are releasing just one copy of their latest “secret” album in the hope of sparking a shift in the way music is funded and distributed. The general premise is that the art of music has been devalued by cheap modern distribution techniques and it makes sense to revive the… “400 year old Renaissance-style approach to music, offering it as a commissioned commodity and allowing it to take a similar trajectory from creation to exhibition to sale, as any other contemporary art piece, we hope to inspire and intensify urgent debates about the future of music…” The Wu Tang Clan appear to be miffed, basically, that music isn’t being treated the same way high value art is.
The prospect of US borrowing costs rising sooner than expected is rattling global stock, bond and currency markets. The FTSE Eurofirst 300 is down 0.4 per cent, tracking a poor Asian performance, as the dollar and short-term Treasury yields hold the previous session’s strong gains.
Dorian Satoshi Nakamoto, the LA-based man that Newsweek alleged on Thursday was the probable creator of the Bitcoin protocol, denied all involved in an AP interview — but the plot continues to thicken. As the International Business Times reports on Friday, an online chat account associated with the email featured in the original Bitcoin white paper has become active again. Surprise, surprise — the user is claiming that the man featured in the Newsweek article is not Satoshi Nakamoto. At this stage, one has to ask what’s really preventing the real Satoshi from revealing his true identity and claiming his fortune? (And there are reports that the bitcoins associated with Satoshi are already on the move on Friday.)
Late last year we speculated that if anything was going to disrupt the London property bull market it was going to be a grand exodus, motivated by the economically viable population realising that they could nowadays live and work quite happily outside of city perimeters. You know, the internet and all that. Silly us. Knight Frank’s latest wealth report, to be released on Wednesday, has decided that the greatest disruption to established property wealth centres may come from extra-terrestrial advances instead.
It’s not an easy concept for some gold lovers to grasp, but… a nation importing huge amounts of gold into its economy doesn’t necessarily reflect prosperity on its part. In fact, it can imply economic weakness around the corner. Prosperous countries, after all, don’t need gold (or huge amounts of foreign reserves for that matter either) to back their fiat currency. They don’t need them because they are so mighty, productive, knowledgable, powerful and desirable to live in that they have seigniorage power all of their own accord. You know. Like Bitcoin. But not because they are artificially scarce, but because they are managed well. Also, even if you go with the goldbug logic that fiat ‘money printing’ equals debasement, it must then also imply that mass gold importation equals the opposite: purposeful rebasement. Someone is trying to bolster what would otherwise be a naturally weak currency.
London prime property vendor finance, vignette #1: Luxury property developer Christian Candy has lent more than £300m in the past year to wealthy London housebuyers, in a bid to profit from the banks’ withdrawal from the market, and aims to take his total lending to £1bn by the end of this year… Last week he lent £25m for the purchase of a £35m private home in Knightsbridge, and he is now in talks to provide £100m for the purchase of a home in north London.
Emerging market strife keeps bond issuers at bay || Zynga to buy UK mobile app group || BT reaps benefits from its aggressive pay-TV drive || Microsoft cloud chief Satya Nadella tipped for top role || BBVA chairman sees ‘significantly improved’ outlook for 2014 || LVMH rises most since 2010 || German 30-year yields fall to 5-month Low on slowing inflation || Markets
Cartels come in many shapes and sizes. There are Colombian drug cartels. Mafia protection cartels. Oil producer cartels. Diamond cartels. Commodity cartels. Central banks. Altcoin cartels. All sorts. All of them, however, extract value from potentially low-value things by means of organised collusion and discipline. Columbian drug cartels organise to ensure drug markets are not oversupplied by wiping out the competition. The mafia organises to extract rents from those who would otherwise not be inclined to pay them, mostly by imposing an artificial market for protection. Oil producers organise to ensure oil markets are not oversupplied for the best possible return from oil prices. Diamond cartels do the same , but since diamonds are not an essential commodity they also create fanciful myths about diamonds being a girl’s best friend to create continuos demand. Central banks control the money supply, and thanks to that can corner and support any market they wish for as long as their underlying currency is demand.
Markets are recovering from their brief wobble at the start of the week with stocks generally firmer and optimism over the US economy helping nudge the dollar and Treasury yields higher. Appetite for growth-focused products is not universal however, with industrial commodities a bit weaker, while gold’s New Year rally is showing signs of losing momentum, the bullion dipping $5 to $1,240 an ounce.