Crunch time

I spent a happy morning coffee today with a hedge fund economist and old friend. He’s looking for the Next Big Thing, having witnessed his hedge fund lose £1 billion in March this year.

The investors saw their gains of eight years wiped out in a couple of trades that month, but the managers have seen healthy returns on their 2% fee on assets under management and their topslice of gains in those eight years.

I ask my economist to rationalise my fears that other sovereign funds will, ultimately, control us… having witnessed them take big stakes in US banks in recent months. He wryly points out that they’ve already lost 50% of the value from further share slides in the market!

Did economics get too complex? And, is our economy increasingly trading in the ‘thin air’ of knowledge assets, intellectual property, advice and services… rather than ‘real things’. Does it matter?

My man says economics isn’t complex. While I highlight supply and demand, he finesses this by saying the key is ‘having something that people want to buy’ and ‘the ability to pay for it’.

So, there’s nothing wrong with my booking a return taxi to a 40th birthday party at a cost of £100, if the benefit to me is drinking at the do and falling asleep on the way home.

And, I shouldn’t fear for my kids… if they can learn to stay ahead, they should remain competitive in the new world order. My man again wryly comments that there are those parents who drop their kids in the deep end and hope they swim… and others he sees who nurture even beyond school to endeavour to get them networked and maximising their chances.

I worry for the place of Brits generally in the New World Order. Will we remain cream on the top, or will we get overtaken by the tsunami of MBA grads from India and China? Where’s the opportunity in that? Are most of us already in thrall to ‘forces beyond our control’ so it’s immaterial if they are American or Chinese?

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