TheBigPond - spotlight on what South African business and business people have been up to in Europe. Edited by South African journalist Christo Volschenk from Stuttgart, Germany. Note: This blog has migrated to a new home at
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Be afraid, be very afraid...

As I've said before, I'm a big admirer of The Economist magazine (despite their stand on the Bush/Blair/Iraq debacle).

In recent years I've especially enjoyed the magazine's articles warning that a property bubble was building in many countries of the world, with the US at the top of the list. The first time they issued this warning was about 4 years ago, if I remember well. Since then they've repeated the message many, many times. But, no-one listened. Or, wanted to listen.

My father used to say 'If you don't wanna hear, you must feel', just before he laid in with the belt. Now it's time for the banks to feel. This extract from a respectable investment newsletter I just received:

"The last four days have seen the already distressed US banking sector lurch towards the precipice of a full blown financial system meltdown. Banks that have already seen stock price falls of as much as 90%, were again hit today, with many falling a further 5% to 10% on fears that a series of cascading bank failures were about to be triggered following the collapse of Indymac bank on Friday, when a run on the bank had panicking depositors withdrew funds at the rate of a billion a day.

"The Federal regulators stepped in to seize the assets and guarantee 100% of the first $100k of depositors' money. Meanwhile, another far bigger crisis was unfolding, as Freddie Mac and Fannie Mae (they insure or manage more than half of US mortgages) were also on the brink of collapse.

"The problem the US banking system now faces is that the failure of Indymac, and bailout of Fannie Mae and Freddie Mac to prevent a far worse collapse, are not an isolated instance, but systemic of the whole banking system. The New York Times estimates that as many as 150 banks could go bust and thus require the Fed to step in to seize assets during the next 12 month, with many of the remaining banks cutting back on their branch networks.

"However, this estimate may still be just the tip of the banking crisis iceberg as the Savings and Loans crisis of the early 1990's witnessed the number of bank failures explode and eventually saw more than 1000 financial institutions go bust. Given that the US is today experiencing the worst housing market crisis since the Great Depression, the banks may be in for an even worse fate.

"The FDIC had some $53 billion of funds available to pay depositors of defaulting banks, of which up to $8 billion has now been eaten up by Indymac, which means the US tax payer will be forced to step in to the tune of several hundreds of billions of dollars if not for over a trillion dollars, if anywhere near the number of anticipated banks fail.

"There is also a risk of an across the board loss of confidence in the banking system, culminating in a series of panic runs on US banks, accompanied by a collapsing US Dollar, as the US national debt levels explode (as the liabilities of these failing banks are taken over by the government) and depositors / investors seek shelter in more secure currencies and assets such as precious metals. The question now is: who will be next on the list to go bust?"

end of extract.

Afterthought: Just another sensationalist investment newsletter writer? My guess: No. Unfortunately not.
15.7.08 13:15


The link between sport and the health of nations

I've always been impressed by the way American Paul Kennedy made a name (and a lot of money) for himself with the book titled The Rise and Fall of the Great Powers, in which he essentially said: There is a link between the political and economic power of a nation and this link remained in place over the last 20-odd centuries.

If ever there was a more obvious thing to say and to make money with!

Since this "surprise happening" I've been on the lookout for links to make money with. I've found a few over the years and would like to test them with my readers. Please tell me if you think I should write a 500-page book on the following links I recently "found":

* While researching something for a client on the internet this week, I "discovered" that American websites are generally much more "untidy", or "undisciplined" than those of the UK and, in turn, the UK sites are a touch "less perfect" than German websites. Put in another way, German websites are far more "ordered", "disciplined" and "tidy" and far better "navigatable" than those of both the English and the Americans. In short, in comparison to the Americans, the Germans are far more perfectionist. Compared to the English, the Germans are noticably more perfectionist. In still different words: The differences noticable between BMW, Porsche, Mercedes and Audi on the one hand, and British and American cars on the other, are also noticable in the new world of the internet.

Now, one can start wondering whether the Germans are going to win the "internet war" against the Brits and Yanks in the long term (in the way they decisively and clearly won the "car war). So, that's my first link: Why the top nation of "old-economy-engine-builders", will also become the top nation of "new-economy-engine-builders" (that's really what websites are).

O, you don't think that's worth 500 pages. Well, then. Try this for size. There is a link between the (almost) total disappearance of top athletes (sportsmen) with American citizenship, and the decline of the USA standing in the world, from a political, economic and military point of view. The sun is setting on the empire and the citizens feel it. In turn, this is impacting negatively on their performance on the sports fields of the world.

A few examples: The US dominated world tennis since the dawn of professionalism in the early 70s. First Connors, then McEnroe, then Agassi, then others, then Sampras and then....nothing. Not even in the top. The same goes for the women in tennis. And in boxing. And (this is my prediction) in athletics. We'll be able to test my thesis in the upcoming Olympics. I say: America will surprise with the (relatively) few medals they win in Bejing.

To summarize the link: The disappearance of Americans on the sports fields and podiums of the world is a reflection of what is going on in the American society and the country as a is in decline on many fronts.

Now, where's the big money?
11.6.08 13:32

For the record

I paged back in my blog this morning, scanning every one of the 189 contributions I had written since 2005, and for the record: I can still live with all - but one.

The article titled "Is Tito about to get egg in face?" published on 17 August 2007 is a really bad one. A bit embarrassing, actually. I could delete it, but I don't want to allow myself that luxury. It would be too easy...if I could just write and later erase again whatever time proves to be nonsense.

That way blogging makes much more fun.
1.6.08 13:27

To those who don't read German...

Only the last five articles appear on the "home page" of my blog. To read older articles, please click on the words "Eine Seite weiter" at the bottom of each page.

Thanks for coming to this crazy blog and remember not to take me and/or the blog seriously. I don't.
20.5.08 10:22

Some help with the navigation on this blog...

To read earlier articles, please click on the sentence "Eine Seite weiter" at the bottom of every page. Thanks for coming to my "naughty" blog.
21.1.08 10:22

 [eine Seite weiter]

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