Martin Wolf’s hair is on fire in the Financial Times:
Suppose that in June 2007 you had been told that the UK 10-year bond would be yielding 1.54 per cent, the US Treasury 10-year 1.47 per cent and the German 10-year 1.17 per cent on June 1 2012. Suppose, too, you had been told that official short rates varied from zero in the US and Japan to 1 per cent in the eurozone. What would you think? You would think the world economy was in a depression. You would have been wrong if you had meant something like the 1930s. But you would have been right about the forces at work: the west is in a contained depression; worse, forces for another downswing are building, above all in the eurozone. Meanwhile, policy makers are making huge errors…
How much pain can the countries under stress endure? Nobody knows. What would happen if a country left the eurozone? Nobody knows. Might even Germany consider exit? Nobody knows. What is the long-run strategy for exit from the crises? Nobody knows. Given such uncertainty, panic is, alas, rational. A fiat currency backed by heterogeneous sovereigns is irremediably fragile.
Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events.
— I agree with William D. Cohan that retail investors shouldn’t play the IPO game, but I think the rest of the thrust of his column, which says “Small Fish Burned in Facebook IPO Knew Better,” is problematic.
Burned investors will grasp at anything — except their own role in fueling Wall Street’s Facebook IPO hype machine — in an effort to recoup some of the billions of dollars they have lost as the stock continues to slide. On May 23, the plaintiff’s bar got into the act by filing three separate shareholders lawsuits accusing Facebook’s management, board and underwriters of failing to provide material information about the company’s second-quarter financial performance to small investors during the roadshow, while providing the same information to some institutional investors. This, the suits claim, caused the small investors to lose more than $2.5 billion after Facebook’s IPO.
There will always be another round of suckers for Wall Street to fleece, but that doesn’t excuse the fleecing. It’s just wrong that one group of investors—the well financed and well connected kind—got inside information about Facebook’s deteriorating numbers while everybody else didn’t.
The small fish didn’t know better. That’s the point.
— This Washington Post piece, about the tech millionaire who bought up the 260-year-old Carter’s Grove property in Virginia, is a good if painful read. Halsey Minor let it fall apart, doing irreparable damage to its history.
Here’s a snippet:
At a hearing March 13, it became apparent that the electric power to many of Carter’s Grove’s buildings had been cut off for nonpayment. A $4 million museum building likely had been ruined by rampant mold, Robert Mays, the longtime caretaker of Carter’s Grove, testified.
“We are doing the best we can with what we have to work with,” he told (Judge) St. John, asking for money to buy fuel and blades for the lawn mower.
Mays said he and his wife, Tammy, who also is employed to care for Carter’s Grove, had not been paid since the end of 2011. They are supposed to receive weekly wages totaling about $1,000. “You know, we both depend on the payroll for our family,” Mays said. “We are still working every day, so I mean, I would kind of like to see where I stand on getting paid.”
The judge had had enough.
“I regret that fact that Mr. Minor has apparently again, I think, misled this court into thinking that, you know, he was one invention away or one endeavor away from resolving this. But I promise you, I understand what’s going on now, and it is reprehensible,” St. John said. “I have given him leeway, and he has made me a fool.”