Scared of Flying? Press the Fear iButton
This is an article along my “Fun Fridays” theme…have a great weekend!
20 November 2009
People scared of flying can now press a button on their iPhone to help them deal with their panic.
Long-haul airline, Virgin Atlantic Airways, has launched an application or “app”, for its Flying Without Fear course, which boasts a success rate of more than 98% (would be interesting to see how they benchmark this).
Apps are a source of information, games and other novelty ideas for users of Apple's iPhone and iPod Touch devices.
The airline said in a statement that this app was designed to help people overcome fear, be it of the unfamiliar aircraft, the strange noises a plane makes or of losing control.
The Flying Without Fear app has an introduction by Richard Branson, a video-based in-flight explanation of a flight, frequently asked questions, relaxation exercises and a fear attack button for emergencies with breathing exercises.
There May be Blood in the Streets, but lots of Opportunities to Make Money
19 November 2009
We always said that we’ll know when the real global economy is getting close to the bottom, because there’s a good chance that we’ll see real blood on the streets around this time.
Schroders Head of UK Equities, Richard Buxton, sees that coming in the UK, due to severe economic headwinds in 2010 and 2011.
Hannah Stodell reported recently at the Schroders London investment conference that Buxton said, “the UK was in an environment of artificial normalization”. Stodell went on to report that the economic reality will be tough and headlines will be grim over the next two years.
“The banks, yes, they can fund at the very short-end, but there’s still a lot that has to be sorted out and we’re by no means back in a normal environment, nor will we be for some time. I think there’s going to be public sector strikes, leading to uncollected rubbish in the streets and a winter of discontent-type scenarios. I think there will be riots; I think it’s going to be very messy over the course of the next two years”, remarks Buxton.
Buxton goes on, stating, “there will be substantial personal sector tax increases, the government can’t do much on the corporate side, because you now have an open competition for domicile and companies will just shift. We are in a mess.
”Buxton warned that banks are still in the process of deleveraging, so credit growth will be very limited and he predicted public spending cuts to lead to at least 250,000 public sector job cuts.
"The easy part of the ride of the last six months is over. It’s going to be much more volatile in the coming six to nine months, but there are lots of opportunities to make money," Buxton stated in closing.
Is it Too Late to Get in on the Gold Rush?
18 November 2009
Gold hit a new record yesterday, rising by $22.50 to close at $1,139. It seems like only yesterday it was breeching $1,000 and now look how the yellow metal is growing.If you had bought gold about ten years ago, you did very well, as gold sells for more than 4 times that price today. But does that mean the gold rush is finished?
Here are six reasons that we may be in a gold bull market:
With interest rates near zero, there’s basically no opportunity cost to choosing to buy gold over Treasuries.
The US Fed is going to keep building debt, which is likely to cause world-wide central bank inflation, as banks seek to devalue their currency in an effort to keep the dollar strong.
In a departure from their usual routine of selling gold, central banks around the world are now buying more gold than they are selling. They are looking to shield themselves from the weakening dollar.
Countries are increasing the amount of gold in their reserves. On the one hand, developed nations, like Italy and France hold 66.6% and 70.6%, respectively, of their reserves in gold. Although countries like Russia and China only hold 4.3% and 1.9% of their reserves in gold. Developing countries have an easier justification for growing their holdings.
Few people in the US own gold and that is beginning to change.
Lastly, only a few nations, like China, are encouraging citizens to buy gold for personal savings. There’s plenty of room for buying by the public to increase.
Britain May Be Left Holding Banks for 7 Years
17 November 2009
There's an increasingly cavernous divide emerging between British banks.
A week ago saw profit reports from HSBC Holdings and Barclays which, although not entirely up to analysts' expectations, were leaps ahead of the losses that had earlier been reported by Britain's two big state-backed banks, Royal Bank of Scotland and Lloyds Banking Group.
Barclays and HSBC were the duo that last year opted not to take a government bailout following the collapse of Lehman Brothers, while struggling RBS became 70% owned by the state. Some 43% of Lloyds is also now in state hands after the bank took billions of dollars in write-downs, following the takeover of rickety mortgage lender HBOS.
Things have not been getting that much better for the two: RBS reported a third-quarter net loss of $3 billion earlier this month, while Lloyds announced a $6.7 billion, half-year loss in August, adding on Tuesday that it was cutting or moving 5,000 jobs.
It seems the fortunes of British banks could stay split like this for some time.
What is good for the government's broader policy and consumers is not always best for the banks' income statements, hence a potentially slower return to profit for RBS and Lloyds than if they were free of government support. Sure the government wants a return on their investment (in due course), but what’s more important is the British economy improving (with increased lending).
The British government is keeping their fingers crossed that this will happen, while at the same time playing a difficult balancing act to rebuild consumers' trust in banks and helping RBS and Lloyds become profitable again. Best of luck on both fronts.
Understanding Goldman Sachs
16 November 2009
A day after claiming God was on its side, Goldman Sachs CEO, Lloyd Blankfein, gave another baffling defense of his firm's practices, telling a banking conference that over the years, "we have pretty much stuck to our investment-banking knitting." He was defending the trading business, making the point that Goldman is focused on the investment side, which was fundamentally where the company’s strengths were built and remained. Like most defenses of the megabank culture, this would be a good argument...if it were true.
Let’s take a look at Goldman's recent quarterly results to get the truth:
Q3 2009 Revenue
- Investment Banking: $899 million
- Trading and Principal Investments: $10 billion
- Asset Management: $1.4 billion
If you're wondering how investment banking – proud contributor of 7% of revenue – qualifies as Goldman's "knitting," while trading, where 81% of revenue is derived, doesn't even get a mention?
To compare, here’s what the same units looked like at Goldman in 1998:
Q3 1998 Revenue
Investment Banking: $3.4 billion
Trading and Principal Investments: $2.4 billion
Asset Management: $2.8 billion
In 1998, 40% of revenue came from investment banking and now it’s only 7%...wouldn’t call that “sticking to investment-banking knitting”. Annualized out, investment banking revenue has stayed fairly flat over the past 11 years, while trading and principal investments revenue has grown seventeen-fold.
Investment banking in the past was basically a consulting business, very boring with much lower margins. Today it’s all about trading and risk taking, preferably while backstopped by taxpayers. That's where the real money is.
Goldman Sachs isn’t the only mega-bank abusing the situation – Morgan Stanley, JPMorgan Chase, Bank of America and Citigroup all rely on trading operations to either rake it in or cover up loan losses.
This situation is heating up and fierce national debate is about to begin over what to do about this "too big to fail” situation. I’m sure the banks above will be quick to tell you that status quo is cool and no changes are necessary.
First of all, let’s call a spade a spade, most of these aren’t even banks – or at least that’s a small percentage of what they really do. They're trading companies – backed by the US taxpayers, which ensures that Goldman can give bonuses this year that average more than $650,000 per employee.
This issue is just heating up, but sure to get much hotter before it’s done.