Six Months Is Still A Long Time In Social Lending

Two interesting tables from P2P Banking. The first shows all 'social lending' from the time Zopa kicked off in the UK in March 2005 until 28 October 2008 (Virgin Money figures include CircleLending friends & family loan volumes from 2001-'07). The second shows volumes for the six months to end July 2009, with strongest growth in the UK and Germany.

The subdued activity in the US is partly due to regulatory issues, and the burden of complying with the overblown securities registration and marketing regime for such a simple activity as low value lending between individuals. Unless you adopt the Virgin model, of course, which merely documents loans agreed in principle off-line. That's a different business, really, and not one that appears to be growing much on these figures.

Hitting the Surf

Just had a stonking 5 days in Cornwall, mainly sampling the seafood and some hugely generous hospitality on the Helford River. But on Sunday we crossed to the north coast for lunch at the Godrevy Café on Godrevy Beach, followed by a fabulous 2 hour surf lesson with Shore Surf School. It's been over 30 years since I last played around on a board (white polystyrene from Kentucky Fried Chicken, as I recall), but I managed to get to my knees half a dozen times and to my feet once during the session. I'll definitely be back...

Music To My Ears

"Music has always been a matter of energy to me, a question of Fuel. Sentimental people call it Inspiration, but what they really mean is Fuel. I have always needed fuel. I am a serious consumer. On some nights I still believe that a car with the gas needle on empty can run about fifty more miles if you have the right music very loud on the radio." (Hunter S. Thompson, Kingdom of Fear)

Here are a few short playlists I'll be updating. You'll need to create and log-in to your own Spotify account to play them.

General:

http://open.spotify.com/user/sdjohns/playlist/6OHa58YlOVwHX61LyxrSgO

Blues:

http://open.spotify.com/user/sdjohns/playlist/18gCxm6JjY6Vq1QkiwWTgO

Acid Jazz:

http://open.spotify.com/user/sdjohns/playlist/5nluXO9035KNAicyxg2iD3

Everything's Amazing, Nobody's Happy

While it's of course vital that we identify and solve our real problems, it's worth keeping a little perspective...

Fool's Gold, Fool's Paradise

I've literally just finished Gillian Tett's Fool's Gold, an insightful, frank and highly readable account of the credit crunch, explained from the standpoint of the JP Morgan staff who somewhat unwittingly unleashed the Bistro-style CDS derivative into an environment of such stunning irrational exhuberance, greed, negligence, recklessness and downright fraud that it's left even the insiders angered and aghast.

And it ain't over yet. While subprime default estimates continue to be revised upwards, bankers brazenly continue to repackage downgraded debt into yet more CDO's backed by leveraged loans.

Importantly, Gillian Tett's narrative tellingly confirms a string of cultural problems that we're told again and again abound in the capital markets trading "pit": regulators whose remit and resources prevent them seeing the financial world holistically, a commission/bonus-driven sales mentality that often ignores the limits of the hallowed Gaussian 'models', banking groups that merely comprise dysfunctional silos, the cosy social contract banks enjoy with government. It's little wonder that everyone lost sight of the big picture - and that our faith in these institutions is utterly shattered.

Yet none of these factors is about to change. Amidst all the talk and shuffling of deckchairs little is actually being done to avoid or minimise exposure to Black Swan events. Hedge funds scramble to avoid the sunlight, like the swaps world did previously, and the quest for transparency has degenerated into protectionist farce. With an election still a long way off, competing government and opposition plans for the financial sector realistically mean regulatory paralysis throughout the time when structural and cultural reform would have been most achievable.

We're living in a fool's paradise. Enjoy.