Finance | Futurismic

1337 in 2012 - a free story by Jason “Strange & Happy” Stoddard

Paul Raven @ 07-10-2008

If you need something to stop you hitting refresh on the Financial Times frontpage as the stock markets do their best impression of the North face of Everest, maybe you should try reading “1337 in 2012″, a story that Jason Stoddard has just thrown up for free on his website.

It’s about financial meltdowns and elections, so it’s more than a little topical. Plus it’ll give you the chance to see how Stoddard walks the Positive-sf walk after hearing him talk the talk…

Here’s the opening few paragraphs:

“I want to know how she did it,” Alexandra Jetter said, almost pushing Gary McCabe down the narrow hallway with her refilled-from-the-lunchroom-for-a-week grande Starbucks. Not a single thank-you for calling him in at midnight.

“Doing it wasn’t hard,” Gary told her.

Alexandra snapped around to look at him, baring yellow teeth. “You didn’t vote for her, did you?”

“Of course not.” Though it had been really, really hard to vote for their pet candidate who promised the Bureau more funding, more growth, good times for everyone again, go back to buying Starbucks every day, hallelujah.

“Then how’d she do it?”

“She ran it like a campaign.”

“Of course it’s a campaign!”

“Not that kind of campaign.“

A snort. “She rigged it.”

Gary just shrugged.

Go read!

The future of banking

Tom James @ 01-10-2008

As the current financial crisis unfolds, I’ve been wondering how it will affect me as an individual in the future. Hamish McRae reckons it’ll be like it was in the sixties (but not in a good way ):

It is easier in a way to see the situation in a year or two’s time than it is to call the detail of the next few weeks. What we can see is a world where it will be much more difficult to borrow money.

For those who can remember, it will be more like the 1950s and 1960s. Then, if you wanted a mortgage, you had to have built up a deposit in the building society or bank that might lend you the money.

People would open an account with two or three societies and stick as much money as they could in each so that if one would not give them the loan they could try another.

Other interesting speculations on the future of banking can be found in Casino Capitalism, on the BBC’s iPlayer service, available until the 5th of October. One conclusion from that programme is that banks will become more like utility companies, and the idea that banks can be innovative businesses in their own right is wrong - banks should provide basic financial services based on sound risk management (see below).

It’s worth listening to. Also if you haven’t read Charles Stross’ thoughts on the banking crisis, go do so:

…banking is the art and science of risk management. (You have a pot of money. You want to use it to get more money.

Do you lend it to person A, who you figure has a 25% chance of defaulting on the loan but is willing to pay you 1% per month in interest, or person B, who has a 1% chance of defaulting but can only pay you 0.5% per month?

If you picked person B, congratulations: you’re a good banker. If you picked A, you’d better hope there’s a government hand-out in your future.)

[image from Odalaigh on flickr]

What does the financial crisis mean for the future?

Tomas Martin @ 19-03-2008

With the sale of Bear Stearns for £2 a share on Sunday (it was worth £170 a share in April last year), the Credit Crunch claimed a high-profile casualty. But in the long run, what does a possible US and global recession bode, after things clear up? Some people think this may be the worst we get, others think there’s a fair few other banks and businesses looking shaky. However it continues, there’s no doubt that the markets are going to change following the collapse of a lot of mortage-based finance.

The crisis has been caused by an decrease in the enforcement on banking legislation. Without sufficient checks, financial companies offered loans to people who couldn’t afford it, then traded the loans like shares across the world economy. As lenders failed to pay up and defaulted, the companies who traded the paper behind the loans began to make losses and a lack of trust led to less liquidity, or money available for lending between firms. Bear Stearns was one of the companies most at risk, like Northern Rock here in the UK.

Many economists and analysts are starting to look at the repercussions of the credit crunch. Some say that the reduced interest rates by the Federal Reserve and Bank Of England will lead to inflation problems, especially with commodities like wheat, gold and oil recently at all-time highs. Others compare the crisis to other recessions around the world. Although Japan in the eighties and the Great Depression are scary comparisons to make, some say that Sweden in the early nineties is the best one to make, and a good example of how the Fed can get out of this situation: more regulation to clear that bad debt quickly.

But if we’re looking at ways to stimulate the economy, surely we should be looking at moving the focus away from the financial markets and ‘bubbles’? During the dotcom and housing bubbles, wages have stagnated and many have succumbed to borrowing large amounts to keep consuming. A possible solution: invest in new infrastructure for alternative energies, mass public transport and energy-efficient products. Jobs will be created to keep the economy afloat and the financial world could settle to a fairer and more balanced system.

[photo via Calculated Risk]