DYSFUNCTIONAL FINANCE

When I looked back last night, and thought back over exactly how much experience I had gained, and how much practical close personal involvement I have had, in various financial asset developments over the years, I realised it gave me insights unavailable to most. People may imagine modern academic degrees will open their minds to a similar level of insight value, if I may put it that way – but it is simply not so. This idea that they can achieve similar practical results when applying what they have learned is a fantasy they have, encouraged by the propaganda of modern academia seeking a commercial existence.

Let's face it, the Paris Lottery was partly invented by Casanova and er, he didn't 'get made' in a Harvard, Yale, Oxbridge or Singapore University degree factory. (And, reference the pic., Stradivari was a woodworker in Cremona; an artisan, not an academic! And no modern academic has ever been able yet to outclass his work.)

Oh certainly, investment banks and financial institutions and funds management groups make money – so they say... Mostly, though, I believe they just copy pathfinders and take money from others, and lose it and/or simply waste it.

In today's context, to raise a very large sum of money in public markets that are both morally dysfunctional, as well as founded on a public mindset which is totally cynical, requires a unique solution. There IS NO textbook in any university anywhere in the world that contains a plainly set-out answer to the economic challenges of our times and which can be relayed to hundreds of thousands of fee-paying mercantile and grasping, middle-class professional, students.

I guess it is with some degree of personal vanity then, that I post that this week I concluded a contract with an Australian mining company over a $160 million rights issue – that I have managed to get fully subscribed – and that is planned to hit the market sometime between November and Dec/Jan 2012.

These things being subject to a lot of rules and laws about informed markets and so on, there is no more that I am able to say in order to detail it specifically. But one thing I can say is that too many claimed-to-be investment bankers have little or no real comprehension of why and what economic modelling works in today's market – and they basically never will have. They spout the names of theories all right, and they know some technical jargon and a few formulae, but do they understand the principles underlying of any of these; absolutely not!

Fortunately in Australia here, where I normally reside, the Reserve Bank of Australia has some of the finer academic and practical economist minds around. Professor Warwick McKibbin, who sits on the RBA, provided the exception to what I was earlier saying about academics and bankers, when he last week voiced the view that the carbon tax debate failed to demonstrate people's understanding that the time horizons of strategic importance of carbon pollution and energy and food consequences thereof – were the next twenty years, the next fifty years, the next seventy years. He is of course correct and what he says only serves to highlight that there will be a long ramp-up of mounting pressure on key markets – energy, food and food production and inputs, technology, and currencies, and that the needs of these markets will crack the force-field of self-interest and self-serving that government and entrenched interests have tried to surround capital with, and that has obstructed and impeded the flow of money everywhere except other than from the taxpayer directly to the obscene bonuses of privileged figures.

The current Greek banking bailout melodrama is morally appalling, and has no basis in economic or money reality and I am wondering when it is we might see Hill and Knowlton turn up with their story of an evil rampaging Greek pensioner, who refused to pay his taxes, and who ran into the offices of a poor banker in Piraeus, and tore out the fifteen humidicribs and spattered the walls with traces of WMD. In short the bankers of the present world, understand only politics and propaganda, and have no understanding of real business, nor have any ability to actually make money other than by deceiving the taxpayer. But they have a very great understanding of how to speciously present themselves as the monopoly holders of all economic and monetary and financial knowledge and authority. And that is just textbook of what all monopolies become; I'm not being perjorative or harbouring some negative animus against banks, I'm just stating the facts. Banks have become monopolies of authorised financial power, blocking out competitors and exploiting their unhealthy relationship with government to the point where no one requires them to fulfill or perform their original role – which was namely, to take risk, be skilled at it, and otherwise go broke when they failed. They don't know how to take risk any more – they presume 'risk' means the length of time till when the government bails them out and the extent that they will.

The business enterprise and the individual is not on the song sheet at all. Funny front companies and competitive bonuses for bank directors are all that is on the song sheet until the bailout stanza. That is the nature of far too much of what modern banking has become. And it is preventing real opportunity surfacing in economies.

There are great secrets contained in great wine. Here is a Tokaji. If any of Jesus' wine were left over in an amphora till today – god knows, there are rumours of Caligula's Fallernian existing in a Swiss vault... Anyway, if any of Jesus' wine were left today, likely it would be a Tokaji.

I will be drinking Tokaji later this year. Or a Burgundy. No, AND a Burgundy.

Cheers!

Calvin J. Bear