FPS’ Friday Fiver

posted by Edward Jones

Welcome to our Friday Fiver. This week we look at Nick Clegg’s proposals for public ownership of bailed out banks, the ever growing tech bubble and cybercrime, whilst we shift effortlessly from speaking to ourselves in the first person to a collective, as our minds wonder what the weekend might hold. With a few nuggets of information at the very end – so worth reading all the way through!

Thanks to Ben, Dave and Jo for contributions.

The People’s Bank…

It’s not often that ‘I agree with Nick’. But despite the naysayers who say that it’s pie in the sky, the administration of such a project would be impossible, or that Nick Clegg is only mentioning it now to get himself some press attention while he travels in Brazil, I have to say I like the idea of those who bailed out the banks getting something back. I also like the idea of reintroducing share ownership to the public at large because it goes some way to bridging the gap between what people perceive of financial services and equity ownership and reality.

It also helps with the financial education theme which is so popular amongst politicians and financial services companies, but rarely actually really delivers change because at the end of the day it is a one way message. Repeated surveys show the public never really engage or feel comfortable with finance, however well intentioned the various programmes are that exist. If they owned shares, they would pay attention, they would engage, they would also probably make some money in this instance, and get something back for the tax revenue they provided to the banks.

Surely that is worth further investigation?

The bubble keeps growing…

We’ve written before about the soaring valuations of tech companies, and in particular, social media companies. The likes of Facebook, Twitter, Groupon and Foursquare have seen their potential values skyrocket as investors queue up to get a piece of any potential IPO. We (or to be blunt, Dave) have been somewhat sceptical about the value being placed on these businesses, chiefly because the profits most of them are making are barely correlated to the huge valuations put on them.

Over the past week, we’ve had two more cases in point. The first is Pandora, an online music and radio service based in the USA. It floated for $2.6bn mid last week, and its value briefly soared above $4bn according to an in-depth article about this issue in Tuesday’s FT. The second is Shazam, which secured $32m in new funding from venture capitalists on Wednesday. This means a float is unlikely for a while, but it didn’t stop ‘sources’ claiming the company “was now worth hundreds of millions of dollars” according to an FT blog.

The missing element here? Profits. Shazam is making them, but only just, whilst Pandora hasn’t made one yet, and its current revenues of $110m are a tiny fraction of its valuation.

This sceptic remains unconvinced I’m afraid….

Cyber crime

The threat of ‘cybercrime’ loomed large this week after news of the arrest of a 19 year-old hacker suspected of carrying out attacks on the C.I.A and the UK’s serious organised crime agency. After the WikiLeaks saga and arrest of NASA hacker Gary McKinnon it would seem that security agencies are struggling to keep a handle on…well, security. But this isn’t just any security, the issue of ‘cyberspace’ is a particularly tricky one as currently there is no transnational law to define what happens next.

This is an issue policy makers have been keen to address since the National Security Strategy identified cybercrime as a tier one priority risk.

But the question remains, how do we control this vast and intangible area? In the FT this week former British cabinet minister John Reid says innovation is the key to cracking the cyber crisis. What is needed, says Reid, is an ‘elite cadre of innovators able to lead a workforce with a different, entrepreneurial ethos’. We’d like to think they might look like this.

Anyone up for the job..?

Summer Solstice

June 21 saw the longest day and shortest night of the year and despite this marking the official beginning of the summer season it also means that from now on our days will be getting shorter and our nights longer and we might as well all be starting to get ready for Christmas.

But for those of us who haven’t yet embraced the summer months you might want to have a look at Visa Europe’s (client) Third Annual Travel Report which revealed that holidaymaking Britons are increasingly venturing out of the eurozone. Visa Europe analysed international spend trends of 105 million UK cardholders to reveal the countries with the highest annual increase in consumer spend in 2010. While Zimbabwe tops the list, fellow African countries, Gambia (4th), Nigeria (5th) and Morocco (10th) all featured in the top ten.

Definitely food for thought if you haven’t yet planned your summer getaway, but if you would like to keep your feet on home turf, you might want to try and find some at Glastonbury this weekend, which despite its muddy start, festival goers are expected to enjoy the hottest day of the year on Sunday! Excellent.

On the theme of live music…

And fitting for a Friday afternoon, we’ve noticed recently an upward trend in people singing out loud on trains along to their ipods, regardless of the fact that their fellow commuters are either staring at them and tutting, or sniggering quietly behind their copy of the Evening Standard. It’s not surprising given the tendency of City workers to drown their sorrows before boarding the train back to the home counties and with more mobile music, it was bound to happen.

Last night’s performance was a classic though, not only the odd word being sung, but the full nine yards. Eyes shut, belting out a rambling drunken version of what sounds something like a combination between Blur, The Streets and Bob Dylan but with one of the most awful voices ever heard. The whole carriage falling about laughing, the commuter/singer totally oblivious, eyes still shut, finger pointing in the air and occasionally tapping on the table in front of him. Never mind karaoke, this is surely a new national sport. Is this is continuing influence of reality TV? Dave, we think you might know the answer, but can anyone think of a name for it?

The best of the rest…

If you haven’t read a transcript of this week’s treasury questions, never mind, but for *the record* this summary from Paul Waugh comes highly recommended.

H&K’s very own Candace Kuss has written an excellent article for CNN on her experience at this year’s Cannes Lions advertising festival.

And BIS published a consultation on consumer empowerment this week, which we think you might like to know about.

Have a good weekend.

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