On Thursday, alone, the FTSE 100 index climbed 3.7%, and the performance the previous day was not too shabby, either. Thus we have gone from sub 5,000 to nearly 5,300 in the blink of an eye.
The rise yesterday was attributed to the launch of QE2. Now that we have become more familiar with this experiment, we know that it boosts asset prices. It is a given. And it will fuel inflation, longer term, but that is thought better than a total breakdown of the banking system. You can see why it is so, as a politician.
Too much information…..
But, it has driven up the price of the wrong sort of assets; food, certainly, which sparked the “Arab Spring”. Oil, who knows. Others, likewise. There seems little correlation between global economic activity, and the cost of any of these things. Indeed, investors have either speculated on the outcome, or tried to shelter. Neither has worked. So just looking at data points is not going to give you an answer, which will protect and grow wealth. Indeed, the amount of information available is way beyond our capacity to absorb, so you need someone to tell you how it is.
Talking ourselves into a downturn…..?
Step forward the Governor of The Bank of England who warned this week that theUKmight be facing its “most serious financial crisis” ever. Hmm, well thanks for that. It has been noticeable these last few weeks that the most vocal people are also the most pessimistic, not that it makes them wrong. I do wonder if we are talking ourselves in to another downturn, however.
Away from the noise of markets, a couple of things stood out this week. The death of Steve Jobs, co-founder of Apple, will leave a void at the world’s largest company, but what struck me is that most people heard about this on a device that he created. It is quite difficult to imagine either of those things happening again.
The other was the case of Amanda Knox, imprisoned for four years for the murder of Meredith Kercher, in Perugia, Italy, in November 2007. I have no comment to offer on the case, but the Italian judicial system clearly needs overhauling, to put it mildly.
Ms Kercher was in Italy on the Erasmus student exchange program, at the same time as my daughter, although she opted for Granada, and then Verona. The Universities are geared up for this, and many students participate each year, but there is no help with accommodation. We gave ourselves four days to find somewhere, and in both cases were very lucky, but it is obviously high risk. The initial news fromPerugiawas, therefore, shattering.
Two part trial……
Katie has gone on to be a journalist, so there was both a professional and personal interest in the case. We talked on Tuesday evening, after the verdict. Have you heard, I asked? Yes, but have you seen, she replied? There were two parts to the trial, one a case of libel, the second the more substantive. Guilty of the first, at which point, the Mail Online, (second largest website in the world), hit the button with a pre written article, by the unlikely named Nick Pisa, announcing that the 26 year sentence stood.
A rush to judgement…..
Whilst the offending piece was taken down very quickly, the instant rush to judgement has obvious parallels with financial markets; no one stops to think. Mr Jobs, brilliant designer/engineer and marketer, may have left us a double side legacy.
6th October, 2011