Tomorrow is already summer solstice – mid-summer, in celestial terms.
How did it get here so fast? Where’s the summer?
This morning we walked along the Thames. ITV frequently has its reporters and cameramen along the Southwark quay, interviewing people – for the day’s chatty news coverage, we suppose. Today, there was a young woman in a bikini, her back to the river, her face to the camera…talking to a newsman.
The poor thing; it was freezing cold, with strong winds blowing across Waterloo Bridge as though a tempest was coming.
Yesterday, too, the rain pelted down on London, and the wind whipped it against road-signs and windows.
But our beat is not the physical weather. No, instead, our métier is gloomier. It involves trying to take the temperature of the financial markets…and to figure out its seasons. But like any good meteorologist, we begin by looking out the window!
And what a view it is.
Last night, we had dinner with a friend at the Savile Club. There, we met one of London’s most successful hedge fund managers.
“Well, there is no doubt that we have a worldwide liquidity boom,” he offered. “And there is no doubt that it will come to an end sometime. But a lot of money has been lost guessing when it will be. I don’t mind guessing, of course. It’s part of the job. And my guess is that this boom/bubble will run for another five or six years. There are just so many more players in the financial markets…and so much more money coming in.
None of the restraints of the past are in force now. Remember, many of them were just customary – people felt awkward taking too many risks…or raising too much money…or paying too high a price. Now, the new players don’t seem to have those kind of hesitations.”
The City of London, which is the equivalent of New York’s Wall Street, used to be run by stuffy old men in stuffy old suits in stuffy old offices. A friend of ours worked there in the ’60s. He recalled.
“Oh, it was so quaint and so civilized. The partners all wore Derby hats. And a butler would bring around tea twice a day. At 11 and at 4. He wore a morning coat and served the tea, with white gloves, on a silver platter. After tea-time, everyone went home.”
Then, how it all changed! The old boys were out. And the new boys were very different. They wore open collared shirts and had degrees in mathematics. And now they work around the clock.
But what are they working at? Ah…that is a good question. You can stand in front of one of their office buildings all day, dear reader. You will see no products coming out of it. Not even smoke rising from its chimneys. For all their sweat, the ultra-smart professionals seem to produce nothing – at least nothing you can see. Nothing you can eat. Nothing you can sit on. Nothing you can use to brush your teeth…or read for amusement…or kill a varmint with. Neither animal, vegetable nor mineral. The output of the City is intangible.
But people must like it. They pay heavily for it.
Looking out our window, we see what it is. London is covered in molasses. Credit is flowing everywhere, pouring in from every corner of the globe. Rich, sticky…a source of decay. Russians drive around in Lamborghinis. Arabs fill up restaurants. Japanese and Chinese shoppers raid the boutiques.
London is not the most expensive city in the world (that dubious honour falls to Moscow). But London is not far behind at number two. On the list of the world’s most expensive cities, no American burg even makes the top ten. Does that mean the dollar is undervalued? Or does it mean that Americans just don’t have very much money…that they can’t afford to have a really expensive city?
Markets and Money