Foreign Perspectives

Archive for October, 2008

Although you’d think that there would be fewer Americans travelling abroad these days with the weak dollar, it seems to be the opposite that’s true. Not only are they travelling abroad more, but they’re considering purchasing property abroad too which is relatively unusual as well.

The dollar makes for a really serious price rise from the American perspective. Take the example of a property notionally priced at €800,000. Not so long ago that would have equated to around $1,000,000 but these days it’s a lot closer to $1,400,000 which is one serious price rise by any measure.

But even on the much smaller scale of vacation spending there’s quite a significant effect on costs if your income is in dollars. Typically this means that Americans on vacation in Europe need to downgrade the quality of accommodation that they use during their travels and we’ve noticed a significant shift towards the use of hostel reservation systems which wouldn’t normally generate much American business.

On the other side of the coin this, of course, means that property in America is pretty cheap for Europeans at the moment and it’s quite common to see American property promoted in European markets currently. If only I’d a few dollars to spare, I’d be quite tempted to buy a vacation rental property over there at the moment as the current strong euro/weak dollar isn’t what one would normally expect ie there’s going to be a swing back the other way in due course.

Just when you thought it was finally becoming affordable to get a video camera, they’ve gone and changed the goal posts.

At the moment the cheapest sensible camcorder is coming in around £140 but the cheapest sensible HD model is more like £430 ie getting on for three times the price. Is that extra cost worth it?

One of the main problems that going digital brings is that you just can’t get any more resolution out of the image than you had to begin with. That’s the same with normal film too, of course, but the difference is that normal film has a substantially higher resolution than any digital media you’d realistically be able to afford. The other problem is that display screens are constantly increasing in size. Thus the 13″ screen that was perfectly adequate some years ago has long since been replaced by a 20″ flat screen (equivalent to around 22″ on a non-flat model) and so we can see the limitations of images taken by older technologies.

Bearing in mind that you may well be looking at the images which you record now in, say, 20 years time then the HD devices probably are worth the extra money. You might not notice the difference on the display that you’re using today but chances are that you will notice the difference on the display that you’ll use to view them in even 5 years time.

Now, “all” you have to do is decide whether to go for a miniDV, SD, hard drive or DVD based machine.

That’s actually an easier decision in some ways. The SD card machines are much smaller so if it’s tiny that you want, then that’s the way to go. However, the only technology that doesn’t compress the image is miniDV. Yes, it’s using old-style tapes but if you want the best quality images it’s the one to choose; size-size the machines are about the same as the hard drive and DVD based models.

All being well, by Christmas I’ll have BA Hons Modern Languages after my name.

I’m hoping to do some more courses after that but will be taking it relatively easy in the coming year. For one thing, I want to leave a gap for my hoped for graduation in Versailles next September.

However, that doesn’t necessarily mean that I’ll be doing nothing in the way of courses in the coming year. Skimming through potential courses that I might consider are Exploring Science, Art and its Histories, Astronomy and its companion Planetary Sciences, Exploring history from medieval to modern, Philosophy and the human situation and, finally, Child Development. Something of a mixed bag but all interesting courses.

The Child Development course is on my to-do list but seems relatively hard going so that knocks it out for the coming year. The Astronomy course has a residential falling in September so that’s also out for now. To see what I might be letting myself in for I’ve ordered the recommended texts for the art, history and philosophy courses before making a decision about them but at the moment the front runners seem to be Exploring Science and Planetary Sciences with the latter being the most likely option I suspect.

Muddling through just doesn’t cut it these days and never really did which is why one of the first things you should do when you’re starting a new business venture is to write a business plan.

You might think that you only need one if you’re looking for outside investment. Not so. A business plan is the route map for your business and even if there’s only yourself involved, you need to have that map around.

With that map, you have the signposts that you need to ensure that you’re going in the right direction and, more importantly, it’ll help you pick up on any problems early on when you’re a better chance to correct them. It’ll speed up your decisions too as it makes it easier to make the yes/no strategy decisions a lot quicker.

Don’t think that it’s something that you just do for the bank and then put in the drawer. A business plan is a living document. Things change and you need to take account of that as the years go by. For example, your competitors will surely change over the years and change how they do business too; you need to reflect that in your own plans.

Which is a very long way of saying that you’d be crazy not to take Trump University up on their free course “How to Write a Business Plan“. And, no, it isn’t a course just for us MBA graduates but is something for everyone in business or who would like to be in business.

With 20/20 hindsight, Northern Rock was an obvious disaster waiting to happen.

When a relatively small regional bank turned out to be writing 20% of all of the UK mortgage market, weren’t some warning signals coming up? After all, that kind of growth in market share implies a very aggressive approach to marketing and indeed on pulling in money to fund all those mortgages.

Bear Stearns, along with many pure investment banks, tends to have quite an aggressive approach to running it’s own book too As it turned out, it was a little too optimistic with the projections and ended up just as bankrupt as Northern Rock for pretty similar reasons.

The approach on both sides of the Atlantic was quite different. Whereas the UK government continued to dither about and ended up taking over the bank itself, the Fed was much more aggressive in going for what needed to be done. They simply transferred the bank to JP Morgan (“sell” isn’t the word to use given the price paid) and backed only the residue of the business that couldn’t be easily transferred.

Which is the right approach and what’ll happen next time around?

Unfortunately, neither is really “right” in the sense of being a workable solution to the problem of the debt crisis. In both cases, a signal has been sent out that significant banks won’t be allowed to go bankrupt and that the government will take over the highest risk aspects of any bank when necessary. I’m not sure that’s a good message to be sending out at the moment as it implies that there’s no risk too much.

On the other hand, would it be better to have let one of those banks go bankrupt? Northern Rock had a major slice of the UK mortgage market and large numbers of savers so letting it go wouldn’t have been good for the government at the next election for sure. Although Bear Stearns hadn’t as many private clients they’d have been pretty vocal ones given the amounts involved but aside from that the bank was a major player with many interlinking deals and would have caused severe repercusions had it gone down.

Sadly, it’s looking like these two banks are merely tasters of what is to come if the credit crisis isn’t sorted out very soon.