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Business as Theatre

Last week I spent two evenings at rather different spectator events – the first listening to Robin Klein at London Business School and the second watching David Hare’s new play about the economic crisis The Power of Yes at the National Theatre.  I have to say that I much preferred the former to the latter, not just because of the difference in ticket price I assure you! The play wasn’t the best I’ve seen – more of a Panorama-style documentary to explain to the man in the street what’s been going on.  Amusing to see actors portray Ronald Cohen, John Moulton, Adair Turner and others.  In fact the latter was sitting two rows in front of me and wore an expression of smiling relief having come out of it without criticism.  To my eye the audience was full of retired folk who probably came to see why they’d lost their pensions.  Wise then to steer clear of the stories about Madoff and Stanford and focus instead on what was wrong with the mainstream financial sector  – apparently awful people like Adam Applegarth and Fred Goodwin.  “Ronald Cohen” told us that on a scale between ‘interested in people’ and ‘interested in business’ Fred scored 100% at the latter end.

The stand-out lesson was about human nature – we are mainly influenced by our own recent past.  A long bull run and nobody remembers what went before indeed nobody remembers to even question what’s going on.  Is it enough for the banks to say ‘we had to do it because everyone else was’.  George Soros was quoted relating his own emigrant past to his personal expectation of discontinuous change.

Robin’s talk described his journey from buying into a tiny engineering business, relocating to the UK, a tense brush with a leveraged buyout, elevation to Corporate Executive and finally to a position where he was able to capitalise on the rise of the internet in consumer-facing businesses.  Now of course an investor in many early stage startups.  Some parallels with Soros’s formative years.  For me one section of the Q&A served to underline that setting up a venture capital fund staffed by analysts and deal-doers who lack mainstream commercial experience is more or less hopeless.  I am sure that’s one reason why performance in this asset class has been so poor.   Robin presented many learning points; David Hare sadly too few.


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The Stage

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Credit Crunch Hype & Reality

The City

Reflecting today on the crunch and that somehow it doesn’t seem over, simply because we haven’t yet understood what happened. Chatting on the phone tonight with a pal Mark Fenton O’Creevy who related a story about the BBC seeking his input to a programme. They were attracted by his blog post “Has Robert Peston caused a recession?” It was an eye-catching headline but Mark’s concluding para was clear enough: “The media have an important role to play creating this future; they are not just disinterested bystanders. Whether they like it or not, journalists are not just reporting a financial crisis, they are performing it.”  Mark related how the BBC were disappointed that he didn’t have an ‘extreme’ position to take because they were hoping to set him up on TV with an equally vociferous commentator with the opposite view.  Mark’s point: the irony of trying to over-inflate an issue when that issue was itself about media over-inflation was lost on the BBC.  Maybe the BBC staffer had the wrong incentives?

Meanwhile had a visit from an ex-Lehman’s banker today who described at length the internal course of events before their collapse – essentially taking issue with what has been said in the media, for example by our very own Andrew Gowers.  My visitor’s final take though was an admission that any ex-Lehmans banker trying to defend the taking on and parcelling up of such a huge amount of toxic assets was like trying to “polish a t###”.

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