Is it a bubble, is it a bear?
How will history judge this week’s market correction? Will it simply be a blip on the graph that will be quickly forgotten?
Or will the correction that stemmed from authorities cracking down on illegal fund flows into the sharemarket in China be remembered as the first sign of a more serious correction?
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It may be pertinent to look at the world’s greatest sharemarket bubbles…
In 1623 admired varieties of tulip bulbs were selling for 1000 florins each, but 10 years later they had reached 10,000 florins — roughly the same cost as a canal-side home in central Amsterdam. In 1637 the market bubble burst when it became clear that no-one actually wanted to pay so much, and the market withered.
The Mississippi bubble
The Mississippi Company shares increased 20-fold in their year of issue. One year later, in 1820, the shares had fallen to one 10th of their market high.
The South Sea bubble
Speculation on the wealth to be found in the Spanish colonies in South America pushed the South Sea Company’s shares fivefold within four months in 1720. The monopoly was riding high with a £1000 share price; three months later those shares were worthless.
Twice the rail craze produced crashes; in Britain on the 1840s and in America during the 1870s. In America over-investment in the new transport resulted in other businesses suffering and spiralling interest rates. The bubble burst in 1873 — the year of America’s first successful train robbery.
The Wall Street crash
In 1929, stock prices were 400% higher than in 1924. Panic selling set in during October 1929, giving the world the Great Depression and unemployment to close to 17 million people.
Japan’s monetary mistake
In 1985 Japan loosened its monetary policy to boost the value of the yen. The yen doubled in value and Japanese companies went on a buying spree of American and European assets. Australia paid off its national debt by selling land surrounding its embassy in Tokyo. The bubble burst in the early 1990s and Japan’s banks and corporations still struggle with the weight of the bad debts and stagnation that followed.
The dot-com boom and bust
Venture capitalists threw money at any internet venture fuelled by the promise of huge profits. However it became apparent that few of the dot-com businesses could provide returns on these massive investments and the sharemarket plunged. The NASDAQ fell by more than 70% between 1999 and 2002 on back of the dot-com collapse.
The above extracts are from the book: A Business Miscellany, published by Profile Books $29.95. Distributed in Australia by Allen and Unwin.
See a review of this book in our Growth Resources’ section Biz Books by clicking here.
Are your ears burning? Google it
The service is very simple — you put in a word or words you’re interested in, where you want Google to search for them — blogs, news services, or the whole net — and how often you want to be updated, and Google does the rest.
Of course, Google Alert will only be useful for keeping track of mentions of your business if it has a reasonably unique name – the web is a big place, after all.
Democracy letting women down
A recent study from the Australian National University examining how well Australian democracy serves Australian women has found that Australia has resiled from its commitment to gender equality and many of the achievements of the past have now been undone.
“This is most obviously true with regard to the dismantling of women’s policy machinery and the silencing of the women’s non-government sector,” the report says. “While the body of legislation designed to protect women from discrimination remains substantially intact, it is evident that on its own the legislative framework is inadequate to ensure a substantial political equality between women and men.”
The report’s authors say some states, like South Australia, are better than others, like NSW.
The report raises serious concerns about the extent to which successive decades of feminist activism and varying levels of government commitment have failed and calls for ongoing pressure on Australian governments from extra-parliamentary advocates for gender equality.
It will be important to future generations of Australian women that the concerns raised in this report are properly addressed. It concludes:
“For current and future governments, rebuilding the policy machinery and revitalising the women’s NGO sector should be seen as political priorities. However it appears that if this is to be achieved in the face of political neglect and apathy, a renewed struggle by a revitalised Australian women’s movement will be required. There is little evidence to suggest that a change of government at the federal level would be enough to turn the situation around.
“Neither major party currently demonstrates much commitment to gender equality as an essential component of democracy and therefore as something that should be provided for as a matter of principle. Because of this, any new government is instead likely to need persuading that there is a more immediate electoral benefit to be gained from the investment of time, effort and money required to reconstruct what has recently been dismantled.”
A great service for forgetful people
For a fee, NewYourKey takes a copy of your keys and holds them in a secure storage facility. Then, the next time you lock yourself out of your house/car/work, one quick call and NewYourKey will courier your keys to you within one hour, even if it’s the middle of the night.
Great idea — but would it be viable in a city without New York’s massive population?
From the writers of The Economist comes A Business Miscellany – a sort of Guinness book of business records and titbits. One list to fantasise over at the end of a working week is the list of tax havens. Are you banking in any of these countries?
Antigua & Barbuda
British Virgin Islands
Isle of Man
St Christopher (St Kitts) & Nevis
St Vincent & the Grenadines
Turks & Caicos}
US Virgin Islands
For a review of the book and more lists head to SmartCompany’s Growth Resources’ Biz Books page by clicking here.