I’d never have guessed haircuts caused chaos in money markets

Wednesday, 17 August, 2011

Haircuts, but not haircuts as most of us would know them, apparently played a big part in the recent chaos that gripped the world’s money markets.

The cause, it seems, are “haircuts”, Wall Street jargon for the amount subtracted from the market value of an asset, such as a government bond, that is used as security when a bank borrows cash from another bank. During boom times, haircuts range from 1 to 10 per cent, making it easy for bankers to borrow. Having a cheap and plentiful source of ready cash tempts bankers to gamble it on risky and potentially “toxic” investments, as happened in the run-up to the crash in 2008. But in recession, haircuts zoom up as high as 100 per cent as banks rein in their assets, which can paralyse the financial system through a cash-flow drought.

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If porn is down this must be some downturn

Friday, 18 September, 2009

The global financial crisis certainly isn’t being selective with the areas of the economy it targets… even the porn-movie sector is having a hard time of it (or difficult time, if you’d prefer).

If the Valley used to make 5,000-6,000 films a year, says Mr Kernes, it now makes perhaps 3,000-4,000. Some firms have shut down, others are consolidating or scraping by. For the 1,200 active performers in the Valley this means less action and more hardship. A young woman without Ms Hartley’s name-recognition might have charged $1,000 for a straight scene before the crisis, but gets $800 or less now. Men are worse hit. If they averaged $500 for a straight scene in 2007, they are now lucky to get $300. For every performer there are several people in support, from sound-tech to catering and (yes) wardrobe, says Ms Duke, so the overall effect on the Valley economy is large.

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Blaming David Bowie for the economic meltdown

Friday, 23 January, 2009

Don’t blame the banks for the sub-prime financial crisis, don’t you know, it’s all because of David Bowie, and his “Bowie Bonds”.

For those not familiar, the “Bowie Bonds” allowed the buyer a share of the royalties from the singer’s back-catalogue, while Bowie picked up future profits up-front. In an article in today’s issue of British tabloid, The Mirror, Davies said: “The banks were catching on to the idea. They thought, ‘We have billions out there in mortgages which are going to pay us back very slowly. Why don’t we sell those and get the money now?'”

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The depression will be televised

Thursday, 27 November, 2008

An interesting article illustrating what an economic depression, were it to happen, might look like today compared to the great depression of the 1930s. It seems most people would retreat to their living rooms and spend their jobless days watching TV

A depression circa 2009 might be a less visible and more isolating experience. With the diminishing price of televisions and the proliferation of channels, it’s getting easier and easier to kill time alone, and free time is one thing a 21st-century depression would create in abundance. Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows, as the nation’s unemployed sit at home filling their days with the cheapest form of distraction available.

PS: Read also Jeffrey Zeldman’s 10 Best Things About Coming Depression.

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Outlook good for freelance writers despite financial gloom

Tuesday, 4 November, 2008

So says long time freelance writer Yuwanda Black:

Luckily, freelance writing is a career that thrives in good economic times and bad. Why? Simply put, we live in the information age. No matter what’s happening in the world, information needs to be disseminated. When companies cut in-house staff, the “words” still need to get out. Who else are they going to call?

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Do we live in a world without a superpower?

Friday, 3 October, 2008

The ascendancy of the United States is history says John Gray in an article outlining his take on the global financial crisis.

Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

If nature abhors a vacuum, what happens next? Neither China or Russia strike me as being of superpower stature… just yet.

In other news, US federal debt has recently broken through the US$10 trillion barrier (US$10,124,225,067,127.69), up from US$5.8 trillion when George W Bush took office in 2001.

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In times of crisis don’t listen to Seth Godin, eat cupcakes

Thursday, 2 October, 2008

If Google Trends is anything to by, it seems we are more interested in “our impending inability to afford cupcakes” than share markets crashes or the meltdown of the global financial system.

What you have remember though, is that in times of crisis and uncertainty people will, rightly or wrongly, turn to comfort food to see them through, hence the interest, as I see it, in cupcakes.

Via Everything On The Internet Is True.

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Crisis? What crisis? This is an opportunity

Thursday, 2 October, 2008

Now is the time to get entrepreneurial says Seth Godin, because in crisis there is opportunity:

Growth is frightening for a lot of people. It brings change and the opportunity for public failure. So if the astrological signs aren’t right or the water is too cold or we’ve got a twinge in our elbow, we find an excuse. We decide to do it later, or not at all. What a shame. What a waste. Inc. magazine reports that a huge percentage of companies in this year’s Inc. 500 were founded within months of 9/11. Talk about uncertain times. But uncertain times, frozen liquidity, political change and poor astrological forecasts (not to mention chicken entrails) all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen. If I wasn’t already running my own business, today is the day I’d start one.

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