FaceBook and the Fall of Europe May 31, 2012Posted by markswill in Media, Navel Gazing, Politics, Schmolitics, That's Entertainment.
So little space, so much to blurt but as I promised, or rather threatened, a couple of days ago, ready-or-not here it comes.
You’re on FarceBerk right? Almost everyone I know is, even the technophobic and downright shy ones (like me). Some are heavy users posting details of their irritatingly mundane daily activities because they ain’t yet discovered Twitter, others simply regard it as an occasional digital promo-tool for whatever fabulous or intellectually laudable activities they’re up to (like me). But basically I hate it. Sure, it allows you to ‘keep up’ with friends, acquaintances and digital hucksters who from boastful references to your killer air guitar solos will bombard you with adverts for home recording software. Which is why young Marky Zuckerberg floated his brainchild on the NASDAQ last week, becoming even more obscenely rich in the process.
As we now know, the brokers concerned, Morgan Stanley, apparently fibbed about the true state of FB’s advertising revenues, pushed the asking price for shares from $28 to $35 and covertly issued 25% more shares than they claimed. Result? When the truth outed, FB’s share price plummeted and as I scribble the company’s valuation has dropped by some $25billion – yep, 25 billion – although it’s apparently still worth a chunky $79billion and I’m guessing the young snot who started it isn’t wailing too loudly. My underlying point is this: we are surely heading for another dot-com crash, but one that will make the Euro Crisis look like a Sunday afternoon game of Monopoly. Consider that FarceBerk is trading at a price-to-earnings multiple of 81, or 107 times earnings reported in the last 12 months. (The NASDAQ Internet Index average – which includes such heavy hitters as Gargle and fleaBay, is a more modest – but in my view, still barmy – 35 times earnings.) Which means that FarceBerk is gonna have to seriously ramp up its commercial exploitation of your daily doodlings if it’s to justify its revenue predictions.
Since virtually all of these outfits, and especially business-media sites like the equally egregious LinkedIn, currently have very limited ad. revenues, the unseemly rush to buy their shares is classic smoke’n’mirrors stuff, but the difference is that unlike the 2001 dot-com crash, technology stocks now represent a far greater slice of U.S. equities than they did then – almost 50% as opposed to 8% in 2001 – so the fall will be far more traumatic.
This matters for anyone saving for, say, a pension or who has a mortgage. Why? Because banks worldwide, and that includes the bank-of-last-resort, namely the IMF, have to rely on rising stock values to support their loans and debts unless like Britain (and pre-Nazi Germany), they simply print money. And if Greece abandons the Euro and goes third-world – which I bet it will – then the cost to banks holding Greek debt, which is virtually all of ‘em, will be massive. And if those stellar digi-stocks turn out to be nothing more than the Emperor’s New Suit of Woes… be afraid, be very afraid.
Which is why I read the interview with Christine Legarde in last Saturday’s Guardian with a jaundiced smirk. Sexy and bright though she is – in my book that’s horse’n’carriage territory – slapping down the Greeks for borrowing too much from central European lenders without visible means of support will only inflame an already irate population to vote in an anti-austerity left-wing (or neo-fascist right-wing), government next month who’ll demand a return to the Drachma. Then all hell will break loose on the European markets, Spain, Portugal and possible Italy will follow suit, which won’t be pretty.
Undeniably ugly was Tony Blair’s performance at the Leveson enquiry last week during which he admitted that “if you fall out with a big media empire, then watch out because it is relentless”, yet with breathtaking impudence also claimed that there was “no deal” with R. Murdoch over New Labour’s European or media policies. Blair spouting lies is, of course, something we take for granted now, but I was still cheered by David Lawley-Watkin who managed to breech Leveson’s security cordon and live(ish) on television accuse our ex-PM of being “a war criminal” who was “paid-off” by American bankers J.P. Morgan for supporting Bush Jnr’s ruinous Iraq invasion. It was good to see Teflon Tony rattled by his own deceit, if only momentarily.
Leveson is of course turning into an endless saga that threatens to inure us to the magnitude of the venal relationship between politics and the media. In this it is much like the constant unfolding of atrocity in Syria which no amount of hand-wringing by NATO and world leaders will bring to an end, and this because of course the West has too many vested interests in not intervening militarily, especially the Israelis and their Yank backers/apologists. How Lord Leveson can ever come to a conclusion about the incidence of newspaper ‘phone hacking, political bribery by-any-other-name and all the rest is beyond me, but I fear the slaughter in Syria will continue unless and until Russia and China find that the Assad regime they so loyally support has lost its strategic value as an oil producer and Iranian-proxy. Only then will the hand-wringing stop and the gunships go in.
On a happier note – perpetual ray of sunshine, that’s me – all you book burners will be delighted that James Daunt, CEO of Britain’s last remaining bookstore chain, Waterstones, announced last week that it will start selling Amazon’s Kindle e-reader. Only months ago Daunt denounced Amazon as “a ruthless money-making devil” which threatened the very existence of the printed word, so has he caved into what some of my friends and many an online forum bleater see as inevitable and if so, how long will his bricks and mortar book browsoriums™ remain in situ?
Three years, maybe? By which time the piffling amounts cash-strapped councils save by closing their libraries will have removed yet another source of print’n’paper literature. Proof? At 2am on Tuesday police-protected renta-a-thugs protected emptied Kensal Rise Library – opened by Mark Twain in 1900 – of its stock whilst protestors looked on helplessly. You have been warned.
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