Morning:
13°c
Sir Allen Stanford's alleged investment fraud may have been devised far from New York, in balmy Antigua and Houston, but its repercussions were quickly felt on Wall Street.
With the Dow down over 30% in the past six months, it's scarcely as though investors needed any more reasons to pull their money from the markets. But really, is there anyone left to trust?
The problems bedevilling the economy are vast and varied, but they are now psychological as much as anything else. Trust in the financial system has simply evaporated. If some conman doesn't get to your savings, then the inflation, which must follow the vast increase in debt and the supply of money, will. There is no incentive to keep cash. People who can afford them want hard assets, like property and gold.
But then again, the rush for gold also feels like a bubble. Turn on the radio or TV, and you will be lucky if you don't hear an advertisement inviting you to send in your jewellery in return for cash.
Serious gold investors believe the metal still has a lot of room to rise. But if you believe that the moment an investment idea enters popular culture, it's over as a moneymaker, then we're there.
However, the wheel keeps turning. As an investor friend told me yesterday, Icelandic stocks, down over 90% from their peak, are starting to looking attractive.
* Starbucks has been hurting for months now as consumers cut out that $4 morning latte. The firm has closed stores and cut staff, but its shares continue to slump. This week in Manhattan, it introduced its latest wheeze: Starbucks instant coffee. Nothing says recession better than the pioneer of premium coffee going up against the likes of Mellow Bird's.
* One of the few retailing bright spots is a new product called clinical-strength deodorant. It is about 25% stronger than regular deodorant but costs about three times as much. After a couple years of testing, many of the most familiar brands, such as Old Spice and Dove, are now being released in “clinical strength” versions. To quote the marketing specialists, the boom in this sector is due to financially pressed consumers feeling increasingly terrified of what are known as “sweat events”. Let's hope Sir Allen Stanford has a few cases of the stuff on hand.
