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Euro Crisis : Part 111.

Has anyone any meaningful or useful advice to offer on where to invest my savings — or anyone else's savings for that matter. After last Friday's IPO of shares in Facebook at $38.00 each, it is already quite clear that this is a big turkey. After the initial [10 minutes] surge to $45.00 the shares fell on Monday and on Tuesday and are now at $31.00 and still falling. Reports are appearing about the total mis-handling of the biggest IPO ever. NASDAQ failed, the underwriting banks — JPM, Goldman Sachs and Bank of America — failed and Facebook failed. Apart from the bad management on the day, it now seems that the public were not told the full truth about the potential for the company in the days before the IPO. Mark Zuckerberg suffered almost certainly from that affliction of autocratic company executives that mentally over-states the value of the company and then comes to believe in their own hype. But the lawyers and underwriters should deal with this. There were, it seems, one or two phone calls to institutional investors but none to Joe Public. I always thought that the initial valuation of this company seemed over the top. Everything suggested the price as way to high. What do they do to make money? They sell advertising. They do not make a product which has a defined demand — unlike Apple, for example. But what do I know? I am not one of the financial wizards that understands all the jiggery-pokery of the banks and markets. New pundits are appearing from the woodwork who are suggesting that the true value of the shares is really less than $10.00 per share. So all those punters who have invested their hard-earned cash are in for a shock-horror loss. The authorities in the USA are launching an enquiry.

Here we go again. Everything involved in an IPO for Facebook or any other new company involves payment of buckets of money to the investment bankers; these people who have such sophisticated expertise that the need to be paid millions of dollars per year to stay on board. And here again, they will walk away with their multi-million dollar payments and leave the wreckage to be picked up by the government or the public — or both. It is not possible at this stage to "borrow" Facebook shares and short sell them but any investment fund that has bought even small holdings in Facebook is seeing its shares borrowed and short sold. One such investor saw its shares fall by 25% on Monday — bringing a nice little profit for some hedge fund managers.

While all this nonsense is carrying on, we have another meeting of Euro-leaders gathering today with more bags of sticking plaster to stick on the Greek debts. They really are useless. They are in the depths of a catastrophe which was perfectly predictable — ie, setting up the euro in the first place and then waiting for it to collapse into chaos — and now they will do nothing to face up to reality and a proper solution. The euro must go. It will be chaotic but they must do everything they can to minimise the chaos. Hiding away from it will not do. But the reality is that they are afraid of [1] loss of face for introducing the absurd currency in the first place, [2] the consequences of a potential Europe wide collapse, [3] Germany does not want its exports to become more expensive —as they would if the country reverted to the Deutsch Mark — and Germany pays all the bills. But how long will German voters go along with a system that demands they work harder and harder to bail out the Greeks? And as they float along lost in the fog, the world's economies flounder. There is no growth, the currencies are all weak, the debts are astronomical and growing and world unemployment is getting worse. Everyone wants growth. But in this system, growth means taking on more debt.

So, can anyone suggest a good investment for my hard-earned cash?

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