â€œSome people listen to themselves rather than listening to what others say.These people donâ€™t come along very often, but when they do, they remind us, that once you set out on a path, even though critics may doubt you, its ok to believe, that there is no canâ€™t, wonâ€™t, or impossible. They remind us, that itâ€™s OK to believe, impossible â€¦ is nothing.â€
So this week Iâ€™m going to have a look at what has been going on in America. I think the decade of 1999 to 2008 is going be one of the most popular case studies in future economic papers. An interesting time and a complicated time.
Currently in America there is a massive debt crisis, everyone has gone on a massive spending spree lately, racking up huge amounts of debt, buying lots of houses and now no one can afford their credit bills and everyone is defaulting. Right? WRONG! Here is the surprise â€“ I was seriously expecting to see a surge about 5 years ago in consumer spending and debt in America, but it is not there! Consumer debt has been steadily rising, yes it might be getting to be too large a percentage of their income, but the rate of increase has been constant for over a decade. There has been no large jumps in consumer debt. Now I am going to say this in big bold letters â€“ the current crisis in America is not due to a change in consumer behaviour! If anyone tries to accuse the man on the street of being irresponsible and causing the current crisis, they are wrong. The man on the street is doing nothing different.
London has never been considered a center of entrepreneurship. As TechCrunch UK editor Mike Butcher notes, Europeans are encumbered with the well-worn caricature that they’re too lazy and well-fed by the state to exhibit entrepreneurial hunger. More to the point, he says, many are just seduced by the more lucrative and certain path of investment banking. The play-it-safe ethos has long permeated the London scene.
Of course, the dot-com excitement of the late 1990s reached across the Atlantic. But London seemed to catch on late and produced very few home run exits in the form of IPOs or sales. Conservative local investors quickly turned on budding entrepreneurs, and computer science and engineering students at Cambridge retreated to the safety of banks, law firms, and consulting companies. U.S.-based venture funding receded and investments in Europe plummeted.
If you’re thinking about the credit risk stuff going on, then Peter’s article is a good place to start (if you’re an economical luddite like I am that is…)
_ Dodgy dealing and risk peddling
Iâ€™ve been thinking a lot lately about the economic problems that America and other place have been experiencing â€“ the infamous â€˜sub-primeâ€™ debacle. I have a lot to say, so Iâ€™m going to split this into two parts, first: what is sub-prime and what actually happened? The second part will be about the responses and reactions to the crisis and promises to be a goody â€“ yes I will be calling Alan Greenspan an idiot who doesnâ€™t even know basic economics