I had a call from a lady client a few hours before the Facebook (ticker FB: issue US$38) IPO launch earlier this week. She said that her sister had rung her to suggest that they both participate in Facebook because "it seems such a good idea". What did I think of it? Well, it's the answers to these questions that I get paid for, although NOT for much longer thanks to the Financial Services Authority RETAIL DISTRIBUTION REVIEW (more on RDR later!).
The lady client isn't one of the more fundamental or technically minded type of clients. The sort of conversation that I was preparing in my mind mirrored the type of conversation that most people might have with their dentist. How big is the hole? Quite big. Does it need a filling? Yes. A small one. And before one can comment the dentist has plugged the hole and sent one on one's way.
I told her straight. This is blunt broker speak when one can see a raw deal..."I wouldn't touch it with a barge pole." -"Why?" The lady enquired. "It's on a price/earnings ratio of around 10 times that of Apple or Google and Facebook doesn't in fact make anything. It has limited earnings and is 100% reliant on advertising revenues which could disappear at the flick of an eye if the depression that I think we're beginning to witness gets hold." I should point out at this juncture that for months now I've seen ALL kinds of experts roll up on my Bloomberg TV channel saying what an exciting IPO Facebook is going to be. The bull commentators outnumbered the bear commentators about 5:1. But I didn't need anyone to tell me this because I have pretty compelling experience of knowing how Wall Street operates and more importantly how it is supposed to operate. I then told the lady that I didn't expect to see a large premium over $38 (the pundits were all saying $45-$50), thought that it was too late to get an allocation anyway and on a two year view "I wouldn't be surprised to see FB trading at $5 to $10. It's looking nigh on impossible to monitarise alot of Facebook's traffic." Enough said. The conversation then moved on to more enjoyable topics such as her family and art exhibition. For record I got no business from this conversation and actually didn't achieve any commission either. I wonder how many brokers are left in the business who turn orders away as I had just done! The old brokers who taught me the basics used to always say that broking is 50% business and 50% turning away business BUT this is not how Wall Street works anymore nor indeed what is left of Threadneedle Street.
There's been alot of debate recently about how IPO's (new issues) and Secondaries (these are probably better known as rights issues, placings, entitlement offers) should manifest themselves in the modern world where the internet is such an important aspect to distribution. It's clear that fund-raising and listings everywhere are malfunctioning. Why is this happening? There are regulators and investment banking names with the supposed kudos and credibility to ensure that shareholders are ALL treated the same way on a level playing field. Unfortunately the reality is very different. In 1980's my father, a respected London stockbroker, specialised (note I don't use the word "expert") in US market and at the time there was an abundance of IPO's. Most of the major US players had offices in London but the UK broking business that my father managed was plugged into brokers in Tampa, Minneapolis and a number of other US cities. It was a people's business then and just about every deal had underwriters in New York. The business was very active indeed because in those days the US houses relied on other brokers almost exclusively for distribution outside their own institutions. The pricing mechanism was determined by whether brokers (effectively clients of the US issuing brokers) thought the deal attractive or not. Contrary to a few "experts" that appeared on Bloomberg this week there were quite a few bio-technology stocks floated on Wall Street in '82-'82 period that had p/e ratios (multiples) of 100 x to 200 x earnings. I heard a few times that the Facebook valuation was "unprecedented". It wasn't! The TMT bubble in 2000 often repeated the same experience.
What was different though is that in the modern market these very same Wall Street goliaths need to rely on retail distribution. None of these 3 major underwriters are renowned as retail specialists anyway anymore (Dean Witter had long ago been absorbed into Morgan Stanley). In fact Morgan Stanley rarely need retail at all. It now appears that 25% of the allocation was given to private punters as the Street calls them. This is a big "HELLOOOOO" and why anyone couldn't see this or make a judgement beggars belief. Incidentally because hedge funds now dominate IPO's pretty well everywhere one doesn't need to be a rocket scientist to work out that they'll be on the SHORT SIDE within days or even hours or minutes. The current legal wranglings over financial information are being investigated by SEC but I'd be surprised if Morgan Stanley or any of the underwriters did anything wrong. The scale of the issue was vast but the mechanics are always the same. The order flow delayed the float time but this has happened countless times before and is ONLY delayed to ensure a balanced opening market.
What is needed though is a SEC and FSA review (this is really what regulators should be doing) on how IPO's are distributed. For record I haven't had a call from a single US broker for years and if I did then I know that it's a signal that a deal is probably over-priced and about to be shorted by proprietary desks, hedge funds,etc. What is unforgiveable is to allow thousands of gullible US investors to get fleeced in this way.
An old brokers adage is..... "There is no such thing as an EXPERT"
Even the Greeks had theirs....."Beware of ******* bearing gifts"
"If it's TOO good to be true it usually is"
Facebook. Next stop 10 bucks.
Thursday 24 May 2012
Tuesday 22 May 2012
The London Stock Exchange is in an unholy mess Mr Cameron, sort it out NOW please
Dear Mr Cameron
The old Stock Exchange Members book of 1973-74 (I'm sure your family still have a copy in your possession after your late father's exploits at Panmure Gordon & Co) has been taken from the book shelf and I'm just reminding myself of the once great market that my family were part of since 1872. You see it was a free thinking market made up primarily of people who looked after their clients (there were no account numbers or client agreements in those days), understood their roles in the support of UK business, invested freely without hindrance on instant calculating decisions (these were called hunches), gleaned that the clients came first, took for granted that investee companies behaved responsibly at all times (the rogues gallery was much smaller back then I think), calculated that balance sheets and p&l accounts were properly audited, assumed that published reports and accounts were transparent, took full responsibility for their affairs as well as those of their clients, assumed full personal UNLIMITED liability for their affairs as well as their clients and honoured ALL commitments to clients and market counterparties, took pride in the exchange that they were part of and above all enjoyed themselves in a friendly market that had the decency to look after fallen brethren through committed benovolence. DICTUM MEUM PACTUM was practiced rather than taught. Integrity at all times was paramount and could NOT be bought.
Well as you can imagine I'm not exactly ecstatic at the current exchange that your government presides over.
Today bankers, hedgies and most brokers take NO responsibility for their actions (often aided and abetted by compliance personnel whose pockets they often control), never take a financial hit for malpractice or obtuse client losses, treat shareholders with utter contempt and incredibly are still committed to a bonus culture despite the misgivings of those who feel strongly about the unlevel playing field in the workplace.
More important than any of the above though, as well as the current behaviour of the above alongside the FSA and CISI (APCIMS are the only ones who can hold their heads up at these difficult times) the most extraordinary sideshow has been the utter beligerance of the London Stock Exchange itself. On the face of it as a PLC it has done extraordinary well but sadly as an effective functioning exchange for securities representing UK PLC's, capital raising,etc the exchange is failing daily (just look at brokers volumes). There are two primary causes for this. Firstly the exchange is profiteering at the expense of investors and secondly the regulatory experiment is failing at an alarming rate. What is deeply concerning me is that virtually no-one can see this. But then again not many politicians, regulators nor indeed practititioners in the dark art and science of capital markets spotted the 2007/2008 banking crisis either. There is a secret ingredient as Chelsea FC found out by chance over the weekend. Despite countless highly paid managers their success evolved through something which one cannot find in a cv or through a qualification. No it's NOT hard work but this always helps as Mr Osborne has correctly pointed out. No, the secret ingredient is "HEART" Mr. Cameron.
It is the very heart of the exchange that concerns me. It is not ticking as it should and if there are NOT structural changes made to the exchange soon I fear that the exchange itself may suffer a serious heart attack. One of the unnerving aspects of your coalition and indeed the opposition (the culprits perhaps although the seeds were sown as far back as the 80's) is that much emphasis is placed on jobs and support given to big business BUT I see little assistance given to sole traders, small micro-partnerships and SME's. Red tape is rife and crucifying entrepreneurship everywhere and the evidence supports my belief that this started inside our very exchange largely thanks to over-regulation (TSA, SFA and now FSA towards FCA already known as "fuCA" and other hydras) since 1986. One can use the acorns to oak tree analogies till one's blue in the face but acorns everywhere are STILL being crushed by the weight of red tape, regulation, lack of investment and a host of other reasons.
It's interesting to note that in the 1973-1974 members book that there were 100's of broking firms as well as considerable numbers of jobbing firms supported by around 3,000+ members. Most of the firms supported private investors whilst maybe only a dozen or so focused their business models on the corporate market. Since 'Big Bang' the regulators have ostensibly calved up the private end of the market and evolved their very existence on governmental support and cosy relationships with the investment banks. I doubt that banks have ever really had the interest of business at 'heart' as their remits have been profit motives rather than job creativity. Conversely the core parts of the market have been reliant on private enterprise and with it private investment supported by a spiders web force of private brokers maintaining good working relationships with investors. Two things have engineered the destruction of these relationships. The first of course has been the development of the technology supporting business and industry (the internet); we all have to learn to live with the internet. The second has been (over) regulation which has broken the camels back of personal and private investing towards a mangled universe of faceless wealth managers who often than not support funds rather than actual companies. It isn't just coincidence that the AIM and Plus markets are suffering from low volumes and low interest. Long only institutions and hedge funds have no interest in supporting businesses these days and use the liquidity argument when challenged about this. Liquidity is really just a function of the market constituents and if the exchange and regulator takes away the opportunity then the market cannot support itself. It's my belief that the governement should open a debate, even an enquiry (although I doubt that practitioners such as myself would ever get invited to attend) into this BUT much worse is the FSA doctrine that is called mildly 'The Retail Distribution Review'. Thousands of brokers will be wiped out by this (including myself) whilst the new age survivors (mainly young inexperienced personnel who have questionable degrees and pointless qualifications directed around regulation) will be drawn towards funds, ETFs etc. Importantly aged investors will find it difficult dealing with these new age brokers. The average age of brokers has dramatically shifted since 1980 when I joined a private firm. Most were aged militarians and I would say the good ones were often 50+. Today I am 55 and considered ancient and out of touch with regulation. This I may be but frankly I care more about client relationships and markets than what regulators think. It's rather like driving a motor vehicle and having the steering wheel taken away these days. Compliance have the wheel and the new SUITABILITY rules and redefining of RISK are so way beyond the mark that there's every chance that more business will be driven away from UK via the internet towards softer compliance regimes.
As you can gather I dislike the regime that is at the heart of the problem. It seems that surgery is required or even a heart replacement.
My solution is simply either to refranchise the LSE (from a PLC) to private members or even better to pass an Act of Parliament allowing for a new Unlimited Liability Exchange to be created and developed by private brokers without the hindrance of external regulation (that is no FCA and no inteference from Europe). Many have suggested something similar in the past. Now is the time for leadership Mr. Cameron. UK PLC needs new direction and an exchange that supports business and industry. An exchange with "Heart" and common sense will do wonders for future generations as past generations can testify. The current exchange may be sufficient for overseas business but it is not functioning in the interests of British taxpayers or workers.
Incidentally I'm still awaiting your response to my previous communications regarding FSA and RDR. I hope that you might have the decency this time to respond to my concerns.
Yours
Richard Hoblyn
The old Stock Exchange Members book of 1973-74 (I'm sure your family still have a copy in your possession after your late father's exploits at Panmure Gordon & Co) has been taken from the book shelf and I'm just reminding myself of the once great market that my family were part of since 1872. You see it was a free thinking market made up primarily of people who looked after their clients (there were no account numbers or client agreements in those days), understood their roles in the support of UK business, invested freely without hindrance on instant calculating decisions (these were called hunches), gleaned that the clients came first, took for granted that investee companies behaved responsibly at all times (the rogues gallery was much smaller back then I think), calculated that balance sheets and p&l accounts were properly audited, assumed that published reports and accounts were transparent, took full responsibility for their affairs as well as those of their clients, assumed full personal UNLIMITED liability for their affairs as well as their clients and honoured ALL commitments to clients and market counterparties, took pride in the exchange that they were part of and above all enjoyed themselves in a friendly market that had the decency to look after fallen brethren through committed benovolence. DICTUM MEUM PACTUM was practiced rather than taught. Integrity at all times was paramount and could NOT be bought.
Well as you can imagine I'm not exactly ecstatic at the current exchange that your government presides over.
Today bankers, hedgies and most brokers take NO responsibility for their actions (often aided and abetted by compliance personnel whose pockets they often control), never take a financial hit for malpractice or obtuse client losses, treat shareholders with utter contempt and incredibly are still committed to a bonus culture despite the misgivings of those who feel strongly about the unlevel playing field in the workplace.
More important than any of the above though, as well as the current behaviour of the above alongside the FSA and CISI (APCIMS are the only ones who can hold their heads up at these difficult times) the most extraordinary sideshow has been the utter beligerance of the London Stock Exchange itself. On the face of it as a PLC it has done extraordinary well but sadly as an effective functioning exchange for securities representing UK PLC's, capital raising,etc the exchange is failing daily (just look at brokers volumes). There are two primary causes for this. Firstly the exchange is profiteering at the expense of investors and secondly the regulatory experiment is failing at an alarming rate. What is deeply concerning me is that virtually no-one can see this. But then again not many politicians, regulators nor indeed practititioners in the dark art and science of capital markets spotted the 2007/2008 banking crisis either. There is a secret ingredient as Chelsea FC found out by chance over the weekend. Despite countless highly paid managers their success evolved through something which one cannot find in a cv or through a qualification. No it's NOT hard work but this always helps as Mr Osborne has correctly pointed out. No, the secret ingredient is "HEART" Mr. Cameron.
It is the very heart of the exchange that concerns me. It is not ticking as it should and if there are NOT structural changes made to the exchange soon I fear that the exchange itself may suffer a serious heart attack. One of the unnerving aspects of your coalition and indeed the opposition (the culprits perhaps although the seeds were sown as far back as the 80's) is that much emphasis is placed on jobs and support given to big business BUT I see little assistance given to sole traders, small micro-partnerships and SME's. Red tape is rife and crucifying entrepreneurship everywhere and the evidence supports my belief that this started inside our very exchange largely thanks to over-regulation (TSA, SFA and now FSA towards FCA already known as "fuCA" and other hydras) since 1986. One can use the acorns to oak tree analogies till one's blue in the face but acorns everywhere are STILL being crushed by the weight of red tape, regulation, lack of investment and a host of other reasons.
It's interesting to note that in the 1973-1974 members book that there were 100's of broking firms as well as considerable numbers of jobbing firms supported by around 3,000+ members. Most of the firms supported private investors whilst maybe only a dozen or so focused their business models on the corporate market. Since 'Big Bang' the regulators have ostensibly calved up the private end of the market and evolved their very existence on governmental support and cosy relationships with the investment banks. I doubt that banks have ever really had the interest of business at 'heart' as their remits have been profit motives rather than job creativity. Conversely the core parts of the market have been reliant on private enterprise and with it private investment supported by a spiders web force of private brokers maintaining good working relationships with investors. Two things have engineered the destruction of these relationships. The first of course has been the development of the technology supporting business and industry (the internet); we all have to learn to live with the internet. The second has been (over) regulation which has broken the camels back of personal and private investing towards a mangled universe of faceless wealth managers who often than not support funds rather than actual companies. It isn't just coincidence that the AIM and Plus markets are suffering from low volumes and low interest. Long only institutions and hedge funds have no interest in supporting businesses these days and use the liquidity argument when challenged about this. Liquidity is really just a function of the market constituents and if the exchange and regulator takes away the opportunity then the market cannot support itself. It's my belief that the governement should open a debate, even an enquiry (although I doubt that practitioners such as myself would ever get invited to attend) into this BUT much worse is the FSA doctrine that is called mildly 'The Retail Distribution Review'. Thousands of brokers will be wiped out by this (including myself) whilst the new age survivors (mainly young inexperienced personnel who have questionable degrees and pointless qualifications directed around regulation) will be drawn towards funds, ETFs etc. Importantly aged investors will find it difficult dealing with these new age brokers. The average age of brokers has dramatically shifted since 1980 when I joined a private firm. Most were aged militarians and I would say the good ones were often 50+. Today I am 55 and considered ancient and out of touch with regulation. This I may be but frankly I care more about client relationships and markets than what regulators think. It's rather like driving a motor vehicle and having the steering wheel taken away these days. Compliance have the wheel and the new SUITABILITY rules and redefining of RISK are so way beyond the mark that there's every chance that more business will be driven away from UK via the internet towards softer compliance regimes.
As you can gather I dislike the regime that is at the heart of the problem. It seems that surgery is required or even a heart replacement.
My solution is simply either to refranchise the LSE (from a PLC) to private members or even better to pass an Act of Parliament allowing for a new Unlimited Liability Exchange to be created and developed by private brokers without the hindrance of external regulation (that is no FCA and no inteference from Europe). Many have suggested something similar in the past. Now is the time for leadership Mr. Cameron. UK PLC needs new direction and an exchange that supports business and industry. An exchange with "Heart" and common sense will do wonders for future generations as past generations can testify. The current exchange may be sufficient for overseas business but it is not functioning in the interests of British taxpayers or workers.
Incidentally I'm still awaiting your response to my previous communications regarding FSA and RDR. I hope that you might have the decency this time to respond to my concerns.
Yours
Richard Hoblyn
The Greek Solution to a global tragedy and euro-farce
As events have unfolded these past few months it has been clear to quite a few market commentators that the issues surrounding the fate of the EuroZone, the fate of the Euro, the fate of the G word (did anyone say 'growth'? what growth?), indeed the fate of capitalism in Europe following a century when there were 2 world wars is likely to be severely tested in the coming months.
The battle between left and right, left of centre and right of centre, and combinations thereon, are NOT the real issues here. Granted, the recent success of Franky Hollande in France and the rise of the left in Greece has certainly increased the tension between socialist ideaology and free-market capitalism but this is really a side show to the real problems.
Most people on Wall Street or other financial centres realise that this really is a numbers game and until the politicians start taking guidance from the markets then these tensions will persist to a possible armageddon outcome. In any event the future for the price of Gold looks supremely rosy, possibly supremely sparkling.
Today markets are faced with G8+2 = G10 (see earlier post) and possibly a few others trying to either provide damage limitation in the event of a Greek bailout (number anyone?) again or even greater damage limitation in the event of a Greek default. In either event what is quite clear is that Greece is in no position to service any form of debt, interest, instrument, roll-over of bonds, derivatives nor indeed anything as it appears to be in an unholy mess. Structurally Athens resembles a financial and fiscal armageddon. Any wealth has already exited in the direction of swiss banks, London real estate, a few greek registered tankers scattering towards the new world leaving the people in a state of confusion, bewilderment, frustration, repression and depression. There are no solutions to the Greek debt crisis simply because there are just too many opposing vested interests. An example is the estimated $100bn derivatives exposure; if Greece defaults then the counterparties, JPMorgan, Goldman Sachs, european banks, global banks, sovereign states, etc would receive an horrendous jolt leaving Wall Street nursing severe losses in equities and bonds. I could easily see a NO BID free markets scenario unfold which would make the '29 crash look like a walk in the park.
A return to the Drachma is one (only?) solution but too many other commentators are fixated on the fall out for creditors. I'm not sure that many have taken on board the full extent of the Greek tragedy here. It is necessary for Greece to start with a total clean sheet whether the ECB, G8+2 = G10, etc create some sort of orderly (in reality there's little chance of anything orderly occurring because markets will pick at the weaknesses in the process) bailout or if Greece chooses to exit either in an orderly or disorderly fashion (the most likely scenario). I was speaking to a few clients recently, many versed in Greek political and economic history better than myself, and we reminded ourselves of the 'Greek Colonel' scenario that might be unfolding shortly. Some military intervention with the purported backing of the people both in Greece and even Spain is not completely out of the question.
What is required though is a rapid and convincing case for complete and utter default along the lines of 'no negotiation for creditors', ' an instant exit from EuroZone, the Euro and the euroland fantasy', a promise from Greece to instate a credible tax universe attracting outside investors and the repatriation of Greek assets. It's likely that even then Greece would have riots, social unrest, a divided political system and in this contect it is imperative that some sort of social aid program should be proffered by IMF & "G10". Of course so long as we're all fixated on "too big to fail" and possible "contagion" doctrine nothing positive will ever happen. Politicians and regulators (basically they're the new Gestapo for the sake of anything positive to say about regulation) need to wake up and smell the coffee here asap. A quick glance at Wikipedia under 'sovereign default' should remind everyone that there have been some considerable NOT 'too big to fail' sovereign defaults combined with debt restructuring already in history; here are just some of them---Spain 1557-1596 (four times), Bourbon France after the French Revolution, Denmark 1850, Russia 1917, Confederate States after the American Civil War and more recently Argentina 1982 & 1989 and Russia 1991 & 1998. Incredibly the global tally is Africa c.39; Americas c. 150 (unbelievable statistic); Asia c.26 and Europe c. 91. In fact Greece had problems in 1826, 1843, 1860, 1893 and 1932. It's certainly worth contemplating these extraordinary statistics before anyone thinks that Greece is going to bring down capital markets, world economies and free capitalism.
The battle between left and right, left of centre and right of centre, and combinations thereon, are NOT the real issues here. Granted, the recent success of Franky Hollande in France and the rise of the left in Greece has certainly increased the tension between socialist ideaology and free-market capitalism but this is really a side show to the real problems.
Most people on Wall Street or other financial centres realise that this really is a numbers game and until the politicians start taking guidance from the markets then these tensions will persist to a possible armageddon outcome. In any event the future for the price of Gold looks supremely rosy, possibly supremely sparkling.
Today markets are faced with G8+2 = G10 (see earlier post) and possibly a few others trying to either provide damage limitation in the event of a Greek bailout (number anyone?) again or even greater damage limitation in the event of a Greek default. In either event what is quite clear is that Greece is in no position to service any form of debt, interest, instrument, roll-over of bonds, derivatives nor indeed anything as it appears to be in an unholy mess. Structurally Athens resembles a financial and fiscal armageddon. Any wealth has already exited in the direction of swiss banks, London real estate, a few greek registered tankers scattering towards the new world leaving the people in a state of confusion, bewilderment, frustration, repression and depression. There are no solutions to the Greek debt crisis simply because there are just too many opposing vested interests. An example is the estimated $100bn derivatives exposure; if Greece defaults then the counterparties, JPMorgan, Goldman Sachs, european banks, global banks, sovereign states, etc would receive an horrendous jolt leaving Wall Street nursing severe losses in equities and bonds. I could easily see a NO BID free markets scenario unfold which would make the '29 crash look like a walk in the park.
A return to the Drachma is one (only?) solution but too many other commentators are fixated on the fall out for creditors. I'm not sure that many have taken on board the full extent of the Greek tragedy here. It is necessary for Greece to start with a total clean sheet whether the ECB, G8+2 = G10, etc create some sort of orderly (in reality there's little chance of anything orderly occurring because markets will pick at the weaknesses in the process) bailout or if Greece chooses to exit either in an orderly or disorderly fashion (the most likely scenario). I was speaking to a few clients recently, many versed in Greek political and economic history better than myself, and we reminded ourselves of the 'Greek Colonel' scenario that might be unfolding shortly. Some military intervention with the purported backing of the people both in Greece and even Spain is not completely out of the question.
What is required though is a rapid and convincing case for complete and utter default along the lines of 'no negotiation for creditors', ' an instant exit from EuroZone, the Euro and the euroland fantasy', a promise from Greece to instate a credible tax universe attracting outside investors and the repatriation of Greek assets. It's likely that even then Greece would have riots, social unrest, a divided political system and in this contect it is imperative that some sort of social aid program should be proffered by IMF & "G10". Of course so long as we're all fixated on "too big to fail" and possible "contagion" doctrine nothing positive will ever happen. Politicians and regulators (basically they're the new Gestapo for the sake of anything positive to say about regulation) need to wake up and smell the coffee here asap. A quick glance at Wikipedia under 'sovereign default' should remind everyone that there have been some considerable NOT 'too big to fail' sovereign defaults combined with debt restructuring already in history; here are just some of them---Spain 1557-1596 (four times), Bourbon France after the French Revolution, Denmark 1850, Russia 1917, Confederate States after the American Civil War and more recently Argentina 1982 & 1989 and Russia 1991 & 1998. Incredibly the global tally is Africa c.39; Americas c. 150 (unbelievable statistic); Asia c.26 and Europe c. 91. In fact Greece had problems in 1826, 1843, 1860, 1893 and 1932. It's certainly worth contemplating these extraordinary statistics before anyone thinks that Greece is going to bring down capital markets, world economies and free capitalism.
Monday 21 May 2012
G8+2 = G10
Like many millions of people globally I was transfixed at the weekend by two seismic events. The first was a certain soccer match in Munich and the other was Obama's tea party at Camp David, Maryland, which by coincidence seemed to get more newsreel through it's watching of the said clash between Germany (Merkel) and UK (Cameron; note Osborne was spotted a few seats along the line from Michel Platini at the match) than the real matters of state. Watching the brief news item on the G8 around an Arthurian Round Table I took a double take. Who are the G8? Well I recognised most of them but wasn't sure who the asian gentleman was, was he a chinese leader or perhaps japanese? On closer examination I discovered that he was the Japanese PM. And then it hit me.
None of these people can count.
I'm sure millions of kindergarten children would have spotted this but '00s of market commentators who are paraded daily on Bloomberg, CNBC, BBC, CNN, Russia Today, France24, etc all appear to have failed to appreciate the simple error as well as the supreme irony in this algebric miscalculation. In a world that is reeling from bad balance sheets, derivative black holes, bond issuances, QE, Tarp it is almost unimaginable that no journalist could have spotted the obvious error either.
The G8 is in fact "G8+2 = G10" or if you're a eurocrat simply "G10".
It would appear that Mr Putin could see the elementary futility of the 'cheap seats' tea party at the camp so he sent his sidekick along, PM Medvedev, who by all accounts was having a jolly time with DaveCam.
The accounting error (that is the '2' aspect to the complicated mathematical equation) apparently has been described as 'off balance sheet' by the Federal Reserve (sic!) & Goldman Sachs (sic 2!) but for clarity at least one present was an unelected politician Van Rompuy who Nigel Farage has had in his sights for some time and the other being Barroso. Of course Italy's Monti is unelected too but that's a minor issue to the greater accounting error.
So now can we please refer to this pact as the "G8+2 = G10" aka "G10".
None of these people can count.
I'm sure millions of kindergarten children would have spotted this but '00s of market commentators who are paraded daily on Bloomberg, CNBC, BBC, CNN, Russia Today, France24, etc all appear to have failed to appreciate the simple error as well as the supreme irony in this algebric miscalculation. In a world that is reeling from bad balance sheets, derivative black holes, bond issuances, QE, Tarp it is almost unimaginable that no journalist could have spotted the obvious error either.
The G8 is in fact "G8+2 = G10" or if you're a eurocrat simply "G10".
It would appear that Mr Putin could see the elementary futility of the 'cheap seats' tea party at the camp so he sent his sidekick along, PM Medvedev, who by all accounts was having a jolly time with DaveCam.
The accounting error (that is the '2' aspect to the complicated mathematical equation) apparently has been described as 'off balance sheet' by the Federal Reserve (sic!) & Goldman Sachs (sic 2!) but for clarity at least one present was an unelected politician Van Rompuy who Nigel Farage has had in his sights for some time and the other being Barroso. Of course Italy's Monti is unelected too but that's a minor issue to the greater accounting error.
So now can we please refer to this pact as the "G8+2 = G10" aka "G10".
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