Foreign Perspectives

Archive for the ‘Business’ Category

One thing that continues to amaze me is just how long some blog promotion efforts continue to run.

Almost a year ago, I started off on the Technorati Favourites Exchange and even now hardly a week goes by that I don’t get a little note to say that someone has added me to their favourites and can I reciprocate? You’d think that it would have petered out by now but it looks like one that could still be running in a few years time.

Others which you’d have thought should have been just as successful have indeed petered out or not really gotten going in the first place. I’d have thought that the mutual blog reviews movement would have really taken off but in reality it’s rare to see more than a handful on any blog that you see doing them.

Now what I need to do is to find the next Technorati Favourites Exchange and get in on it at the start.

The events surrounding the slow death of the Northern Rock mortgage bank get more and more surrealistic by the day.

Back in July last year it was actually the leading mortgage lender in the UK with 19% of the entire market for new mortgages sold in the first half of the year. Bearing in mind that it’s basically a fairly small building society this should have been the first sign that trouble was ahead as it meant that to source the funds for those mortgages it had to move well outside it’s traditional deposit base and borrow on world markets to find the money.

Just two months after announcing these fantastic results we find that the bank needed to go to the Bank of England for emergency support which, of course, it was granted. The next day the troubles began in earnest for the bank as everyone tried to reassure the customers that everything was fine. Of course, it was far from being fine as the large queues of depositors asking for their money bank well knew on hearing this announcement. On September 17th, just three days later the government moved in to guarantee the deposits held by the bank, subsequently extended on October 9th to include all deposits made regardless of the date.

Moving on to today we find that the government has provided some £25 billion (around £1000 from every family in the country) to support the bank and here’s where the magical world of finance really kicks in.

Although the bank seems to have enough security to repay all of it’s debts, to repay everyone would entail calling in the mortgages on an awful lot of people which obviously wouldn’t go down too well and might not even be possible legally for those that have been keeping up their repayments. Of course this is the same situation for all banks: if everyone wanted their money back at the same time there just wouldn’t be enough on hand. Therefore, in a sense, it makes sense for the government to provide backing to avoid repossessions on a wide scale and to provide confidence in the banking system in general.

However, the government clearly need the money back at some point unless they want to nationalise the bank.

The snag is that there is really no way for them to actually get the money back. So, what they’re doing instead is proposing selling bonds to the value of that £25 billion. The problem with that is that nobody wants to buy bonds from a bankrupt bank and therefore the government will have to provide the security for the bonds too which means that they won’t be clear of that £25 billion for some years, if ever (some similar bonds issued for the first world war still haven’t been repaid!).

And, of course, this is just one bank. Granted, a bank that over-extended itself but who’s to say that there aren’t a few other banks around in a similar situation or who could find themselves in such a situation if the current squeeze on credit worldwide continues?

By far the most popular post on our Whole Earth Guide is the one detailing how to go about opening a bank account in America.

The reason is simple really: if you run an online business then sooner or later you generally find yourself in need of an American bank account. Unfortunately, the increased security measures in place post 9/11 mean that it’s not quite so easy to open one these days unless, of course, you’re living in America and therefore a considerable number of websites have grown up with the specific aim of selling you the required information.

Our site doesn’t charge for that information and therefore is increasingly popular as it provides exactly the same information that other sites charge anything from $5 to $250 to provide.

However, we’re sorely tempted to start charging for it too given some of the emails we’ve received demanding additional information and wanting to know why it isn’t on the site yet. What we’ll likely do is to charge for the hand-holding level of information or at least offer it for sale as the information on the above page is quite sufficient to allow anyone to open an account in America.

We’ve been rolling out our marketing campaign to pull in more entries on our B&B listings sites over the last few weeks and it’s interesting to see how differently the offers have been taken up.

First off, the Spanish began with a vast number of duff addresses which implies that a lot of them don’t bother with e-mail for their bookings. Virtually all of the addresses were from free accounts like hotmail and the Spanish equivalents which also implies that they’re not really using the Internet as a primary means of promoting their businesses. Overall takeup was really low at around 0.5% although, to be fair, it’s my first attempt to do a mailshot in Spanish so I wasn’t expecting an overlly high response. What did surprise me was that they looked at the example sites I quoted in really big numbers and also clicked on the various ads that they came across.

This was my second major mailshot aimed at Scotland. The first, about a year ago had a fairly low takeup but this one completely took me by surprise and the takeup has been over 3%. By contrast, they didn’t look much at the example sites nor did they click on the ads: they just went ahead and either signed up right off or passed on the offer.

It’s my first run at Ireland too and early days with that as yet. What has surprised me already though is that a much lower number of places quote an e-mail than I’d expected. In fact, the Internet presence seems largely to be confined to B&Bs with hotels not bothering to quote either an e-mail or a website. Still, we’ll see about Ireland over the coming week.

Next up is England and Wales which I hope to do over the coming week or two. It should provide an interesting contrast with Scotland where I went from fairly low numbers a few weeks ago to quite a sizeable and growing presence today.

We’ve been looking around the prices of places locally and there’s quite a divergence between what some places are actually worth and what they might sell for at the moment.

For example, there’s a major hotel/restaurant complex near us that’s listed for almost EUR 2.5 million. It’s easily worth that as it’s a recently modernised building with over 30 rooms, large swimming pool, gardens, sports facilities, has a second building under construction to add another 30 rooms and planning permission for a third building for the complex plus extensive grounds.

Unfortunately, that complex is totally out of character with the region. There’s nothing comparable to it locally and for good reason: there just isn’t the market for it here.

So, whilst it might well be worth 2.5 million (and probably more), chances are that it’ll sell for around 1.5 million or so. That’s if it sells at all, of course, as it’s nothing like what people would expect in this area which means that nobody is looking to buy such a facility here.