A Quick View of Sydney

Apologies to both readers - I've been in Sydney and have not long got back. Didja miss me?

A few very noticeable things popped up:

1. Some of my friends have been forced to look for new jobs in financial services, and have gone from 200k+ jobs to hunting around the 90k range.

2. Forex traders I know have a precarious grip on their jobs - some laid off, and the rest have had their limits cut. This means that many currencies are trading within sideways bands at present, in my opinion.

3. I don't know where they come from, but there were a hell of a lot of bored girls shopping at Bondi Junction Westfield by comparison to the economic climate. Maybe some just have the money to waft on through. Recession in Aus is coming, and then some due to commodity prices.

Next post on my favourite two indicies that are rare in that they don't lie.........

Subtitles not necessary

On Friday night I watched the Liam Neeson film 'Taken' on my Apple TV. That's not an attempt to show off, but those who have ATV will know that when you play movies with many languages on it (in this case English, French and Albanian), subtitles that normally pop up in the non English speaking parts don't.

I just knew they were all bad guys and would eventually be shot / stabbed / dunked in acid / flayed alive / disembowelled / electrocuted / dropped from 17 story building /or just given a rather stern talking to.

The point is, it didn't matter that I didn't know exactly what they were saying - regardless of what was said, I knew they would be bad people, and it would end badly for them.

It's not difficult (que spurious link to financial markets) to take the same approach to the markets. There is so much being said out there in TV land that is just plain wrong. Take Australia, a country I have lived in and experienced for quite a few years. Media commentators have continued to deny there will be a recession. This in spite of the fact that world sharemarkets are off around 40 - 50%, and commodity prices, of which Australia is so reliant on, have basically halved. At least.

The point is we don't need commentators, media types (like, er, bloggers) and general pundits spouting fiction. We can all feel it inside. We (should) all know dark times are on the way - and have not really hit us yet.

Subtitles just aren't necessary.

Here's a funny video:

Jon Stewart - The Daily Show

Bank Market Capitalisation

Banks. Safe, dependable banks. They put out ads with smiling executives in nice suits who greet you at the door with a firm handshake and seat you in comfortable surroundings with tea and biscuits. Or, in New Zealand, a horse going mad on a high country back block, for some reason.

This comfort was based on easy pickings in a time of rising house and commodity prices, and executives who thought that it was really easy to make money all the time, with little regard for the future, but huge regard for their prospective bonus.

Where are these banks now? This morning I received a graphic representation of where market capitalisation has gone since the beginning of the crunch. It's ugly.



To put some kind of perspective on it, the percentage drops are as follows:

RBS: down 96%
Citigroup: down 92.5%
Barclays: down 92%

Some of the less affected (!) banks:

Santander: down 45%
JP Morgan: down 48%
HSBC: down 55%

Still feel that banks are safe?

Solving the Crisis - Can we have our money back?

When I thought of it, everything seemed so simple. There is a way to have your money back and solve the crisis. It may get a bit messy for the bankers, but not for you.

SOLUTION TO THE CREDIT CRISIS. PROBABLY.

1. Each nation affected (USA, Britain, Ireland, Germany, New Zealand, Australia etc) pulls together their 50 highest paid bankers, and puts them in a room.
2. Send in a referee with one question: "Can we have our money back?"
3. If the answer is "No", then draw a name out of a hat, and shoot him. Leave them all in the room for another 24 hours. Return to 2.
   
4. If the answer is "Yes", the crisis is over!

I look at it this way: On Day 1 there is a 2% chance for any banker his name will be drawn from the hat. They'll like those odds. Unless a particularly stupid banker is the last man standing, the highest is a 50% chance they will be drawn (if there are two remaining at the end of this).

At the point they say 'Yes' (if they do) will give an indication of their own perception of what their own lives are worth, and I guarantee this is a lot higher in percentage terms than what they care about your money. This should be a warning.

Having worked for many years in banking, I can tell you first hand that banking is a very, very easy business. You take in deposits. You lend out the money. You take a margin on the interest differential (and charge some fees). There are obviously a few tricks to learn, but that's about it. Where it all comes undone is wealth management. Bankers take a look at it and say "Hey, we can do this!". It is, unfortunately for us, a very, very difficult proposition, and taken far too lightly by the participants.

More on that later.......

Part 2 - New York woman wants $!

Yesterday's post was a good question (and a real Gen Z question). Some guy answered - he pulled no punches!

THE ANSWER
Dear Pers-431649184:

I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament.

Firstly, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity…in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!

So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!

So in Wall Street terms, we would call you a trading position, not a buy and hold…hence the rub…marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.

Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard to believe that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.

By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation.

With all that said, I must say you're going about it the right way.
Classic "pump and dump."

I hope this is helpful, and if you want to enter into some sort of lease, let me know.

New York 25 year old wants money - and lots of it. Part 1

Sorry to all about my laziness the last week or so - in between articles to be written, market research and kids at horsey shows, I, er........ just haven't got around to posting. Fear not, I am going to do nothing but post a letter from Craigslist that I think is funny - the answer (part 2) is even funnier.

Here 'tis:

What am I doing wrong?

Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly beautiful) 25 year old girl. I'm articulate and classy.

I'm not from New York . I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all.

Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a roadblock. 250,000 won't get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?

Here are my questions specifically:

- Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms

-What are you looking for in a mate? Be honest guys, you won't hurt my feelings

-Is there an age range I should be targeting (I'm 25)?

- Why are some of the women living lavish lifestyles on the upper east side so plain? I've seen really 'plain jane' boring types who have nothing to offer married to incredibly wealthy guys. I've seen drop dead gorgeous girls in singles bars in the east village. What's the story there?

- Jobs I should look out for? Everyone knows - lawyer, investment banker, doctor. How much do those guys really make? And where do they hang out? Where do the hedge fund guys hang out?

- How you decide marriage vs. just a girlfriend? I am looking for MARRIAGE ONLY

Please hold your insults - I'm putting myself out there in an honest way. Most beautiful women are superficial; at least I'm being up front about it. I wouldn't be searching for these kind of guys if I wasn't able to match them - in looks, culture, sophistication, and keeping a nice home and hearth.

PART 2 FOLLOWS......

How it should be

I have no evidence that the following is true, and it could be a work of fiction. However I do agree in large part with it, that there is a much easier solution to the world's problems contained within, I'm sure.

LETTER:

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.

However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You've seen my big home at last years Christmas party. I'm sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don't see is the back story.

I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business - hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom's for the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn't look like it was birthed in the 70's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden - the nice house, the Mercedes, the vacations ... You never realize the back story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.

Yes, business ownership has is benefits but the price I've paid is steep and not without wounds.

Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough. I have state taxes. Federal taxes.Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is theeconomic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don't understand ... to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this?

It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem any more.

Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

So, if you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about ...

Signed,
Your boss