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migalley
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November 30th, 2008, 12:48 pm

QuoteOriginally posted by: DominicConnorItalian , French and German politicians have publicly attacked "anglo saxon" interference in their markets. Aside from their history of anti anglosaxonism, each of them has lost at least two big wars because anglosaxon finance has enbled Britain to outspend them in war.Which two big wars has Italy lost because Anglo-Saxon finance enabled Britain to outspend them?
 
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jomni
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December 1st, 2008, 12:12 am

QuoteOriginally posted by: migalleyQuoteOriginally posted by: DominicConnorItalian , French and German politicians have publicly attacked "anglo saxon" interference in their markets. Aside from their history of anti anglosaxonism, each of them has lost at least two big wars because anglosaxon finance has enbled Britain to outspend them in war.Which two big wars has Italy lost because Anglo-Saxon finance enabled Britain to outspend them?Not Britain. Britan was economically devastated in World War 2. It was only the US who profited from that War.BTW, and Italy was at the side of Britain during World War 1.
Last edited by jomni on November 30th, 2008, 11:00 pm, edited 1 time in total.
 
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penguina
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December 1st, 2008, 7:27 pm

there's anglo-saxon finance and then there's lunacy finance. What has been going on in the past 20 years is lunacy finance not anglo-saxon finance. The US has gone from being an enormously wealthy and productive nation to being a nation of indebted over-consumers. The same goes for the UK over an even longer timescale.The US still has a lot of entrepreneurial spirit, is still hugely innovative and should eventually be able to bounce back. The UK, I suspect, is more likely to return to being the basket case of Western Europe. QuoteThe End by Michael Lewis (Liar's Poker):The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.[...]
Last edited by penguina on November 30th, 2008, 11:00 pm, edited 1 time in total.
 
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DominicConnor
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December 1st, 2008, 9:40 pm

Britain was indeed trashed through WWII, but was on the winning side because it had enough money to just about making it to the finishing line.The Napoleonic wars were where market based debt financing was also critical. Of course efficiently financing a war is not the same as efficiently fighting it, and very distant from efficiently avoiding war in the first place.The future is harder to predict...One balance to high American health costs is the pharmaceutical industry, which it is hard to see the US being a player. This is a parallel to the collapse of British leadership in technology in the late 40s and 50s.Because resources were channelled to shit like cars and defective aircraft, areas where Britain was top dog slipped away (pharmaceuticals, jet engines, nuclear power).America has decided to give up on the next generation of medical treatments for no good reason at all, Britain's lead in nuclear power dispersed so far that now the only way of sorting out nuclear electricity in Britain has been to sell it to the French.Britain has alomst unique demographics which makes it hard to call. People under-weight demographics, which leads them astray.Europe, Japan and the US are aging rapidly and so would Britain be if it had not embarked upon a policy of importing poeple. If this continues, will help a lot, but as in all countries, politically unpopular, could stop tomorrow.The hard times in finance will as I say will be a kick in the nuts for the British economy. Although a return to basket case status is more probable now than a year ago, the UK has much weaker unions and generally more flexible labour markets than Europe, though not as flexible as the US.I see Germany looking a lot more like 1970s Britain. Strong unions and a lot of "cooperation" between state and industry, horrible demographics and absolute poltical impossibility of fixng that through immigration.But my forecast is not all that critically dependant upon the stength or weakness of the British economy.If we look at the rise of London as a financial centre, this was when both the French and German economies were vastly stronger, and there was a period when Italian newspapers loved to point out the GDP per head was higer than the UK.America remained stronger through that period, but London overtook NY.To an extent, the growth of London was partly caused by the collapse in manufacturing industry. Smart numerate Brits had fewer choices than their contemporaries in Germany or the US.And thus we get to the reason it is so hard to call.London is not successful for the same reasons as NY or Chicago, but because it is a convenient place to do business with a fine labour pool.But that pool is very mobile, and over regulation will kill the golden goose.Currently there is nowhere else really to go.Yes, Dubai is coming along nicely, but the sum total of it would fit in one of the larger London office blocks.Sg has depth, but is in worse shape, and Paris/Frankfurt will be screwed over by their politicians.The major centres are not sucking in people much.Thus it is a race condition. The people and investment will flow to the financial centres that look like bouncing back quickest.If London were to fall, it would probably be to a mix of NY/Chicago and whoever gets the hedge fund business which likely will disperse widely.Europe can no more have a top tier market than Britain can regain it's empire. Most British teenagers couldn't even tell you which places were in it, and European politicos have a grasp of modern economics that would embarass George W. Bush.I can't call thatBritain, like America has a really shit high school level education system. Only difference is that Brits know this so there is some possibility that it gets fixed.No I don't think the odds are great.
 
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KennyMing
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December 2nd, 2008, 2:56 am

How about HK , India and China like Shang Hai? It is heard that there have been many chinese students moved from US to mainland due to the laid off storm at Wall Street. Some of them have worked as a quant for a few years. And some analysts also believe that HK and China should be the region recovered prior to Western Region as they suffered less from credit derivatives. But there are too many restrictions on derivatives development in China, they also believe that HK should be benefitial to be a derivatives development financial centre. Traditionally, most financial models will be built in London, NY and even the headquarters of the international banks in their region like Zurich, Frankfurt and Paris and I am thinking if the model development work will be shifted to Asian countries in future. What do you think? (BTW, Your analysis is very detailed)
 
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DominicConnor
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December 2nd, 2008, 8:33 am

There is an obvious gap for a "3rd centre" near the PRC.As you say, there are a lot of Chinese people in the west, who could help staff it, possessing both financial and language skills.And also no-one is actually forecating China to stop growing, but perhaps slowing down to 6-7% a figure that most developed countries haven't had for a long time. Of course to China, India et al slow growth will feel like a recession compared to the high growth they have had for quite a while.Will China rebound first ?Could be, I could go either way on that. Without a derivatives market, I see Shanghai evolving to something like Frankfurt in the long term. Corporate finance, a local equity market, government debt trading, and an entry point to the global markets homed elsewhere.That "long term" currently looks far away.The PRC does not have a legal system, for a financial centre that is at least as critical as electricity, more so since modern markets evolved before electricity.Although Frankfurt became a significant financial centre in a country that was a complete shambles after WWII, Germany had long been a nation of law.OK, they were often bad laws, but even at the worst of times, mostly obeyed both by citizen and state.As Russia showed, you can electrify in a decade, a legal system takes far longer, and requires cultural change. To grow a an ucorrupt, competent judiciary who see the law as more important that the convenience of the government takes at least a generation. The fight between HK and Sg for 3rd place leans towards HK presently. So far, the PRC government has not interefered much in commercial law in HK, but it is a risk of course, but balanced by it's semi-detached status with the PRC which means the government probably won't try as hard to promote Shanghai at its expense.Both Sg and HK are high cost places to do business, but Sg has strange issues with its labour market.As an example Singaporeans often send me CVs with their religion prominently at the top. That's very rare elsewhere, and invariably in the "hobbies and interests section".Apparently it matters there, indeed having worked for a Singaporean firm, I saw stuff that in London would have given every single person in the firm (but me) good cause to sue for a lot of money.Sg has a pretty good legal system inherited from Britain, but unfortunately forked at the point where British companies and law still regarded employees as something close to "owned".Sg has good schools and is relatively uncorrupt.For a financial market to graduate from one that merely serves a strong local economy to a global player it must be independant of political interference. London's "Big Bang" was seen by many as just plain mad, and there were earnest fears of violent civil disorder. Frankfurt and Paris did not free their markets partly because of a mix anti-anglosaxonism and attachment to 19th century economics. Thus the market based in what was earlier in this thread described as Europe's basket case economy, won and went on to overtake Wall Street. When The Economist did the numbers and had a front page predicting that London would become "The Capital of Capital", a good number of people laughed.But no one in Singapore laughed.They weren't allowed to read it.Sg has gone through several phases of banning The Economist, of itself it's not much just the sort of petty shit that 3rd world countries do.The key term is "3rd world". Grown up countries don't ban newspapers, especially one like the Economist that doesn't exactly advocate armed revolution against capitalism.HK has a very market oriented culture and a working legal system, even though on paper someone in HK has fewer rights than someone in the PRC.It's horribly polluted, and the PRC might change its mind about it at any time. Some senior PRC officials would make serious money out of a move from HK to Shanghai by finance outfits, and history shows they would not care if much value were destroyed in the process.When I talk to HK and Sg people and read their CVs, the HK is much more likely to be "front office" or being closer to the money. More front office quants, traders, etc.Sg has a nice niche in good quality back office work. This may in the short term serve it well since this is less volatile, but in the longer term, my sample indicates that the sexy stuff is already far more common in HK than Sg.Of course my sample is of people looking for jobs which creates a skew and is thus not authorative.I know of no formal study that explores this issue, and would welcome a link to one.In this post, I've focused on structual and political issues, rather than important factors like relative size,technology, tax regime and the detail of regulation.That's because job hunters like poeple here care more about growth, and the other factors can change surprisingly quickly. London went from a market that was heavily regulated and a slowly dying backwater in 18 months.By 18 months, I don't mean 18 months of preparation and restructuring, I mean 18 months from a corrupt minister having a drink with a crony, doing him a "favour" by getting more cronies to look at financial markets, doing the report, and crashing the changes through to the going live of a wholly new trading infrastructure.You can now buy a full functional trading system for any class of instrument and have it working in a few months, and regulations can be sorted out in a year. Tax changes are harder because of government IT (blame EDS and Accenture), but one can do it in two years flat, if so minded. That is a bit like what I understand Dubai is trying to do.The structual limitations are worse in Sg than HK, and Shanghai is simply not a runner.Of course being "the Frankfurt of China" is still a very big thing, but without PRC government making serious and clever changes in policy it will always be 2nd division.
Last edited by DominicConnor on December 1st, 2008, 11:00 pm, edited 1 time in total.
 
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jomni
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December 2nd, 2008, 9:02 am

Nice comparison about HK and SG. Worked in SG for more than 2 years now and having visted HK on business, I have the following conclusion:1) HK = bustling (and polluted) metropolis2) SG = countryside village (with lots of greens) But I like the pace of life in SG better. I agree with the points that you raised and you're right to point out that SG is more of back office work compared to HK.
Last edited by jomni on December 1st, 2008, 11:00 pm, edited 1 time in total.
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