It’s amazing how things have changed in my kitchen. My fridge is full of products made especially for me by my friends - Rachel sends me lovely organic Yoghurt from West Wales, a farmer called Geoff grows my potatoes and my milk comes from Daisy and Dotty, two happy organic cows who lives on Hilltop Farm in West Sussex. We even have nice instructions on how to cook our food written by my old mucker Jamie.

The one thing you struggle to find is anything made my Proctor & Gamble, Nestle or Unilever – the dastardly food giants that bring us GM crops and food additives.

It seems Britain has decided that we like our food to be personalised and at least to provide the impression it is green, friendly and local.

Is the financial world about to go the same way?

Citi the world’s largest financial institution was the poster boy for global consolidation in financial services after Citicorp merger with Travelers in 1998. Bout today even the mighty Citi is now trimming down and disposing of parts of its global empire. Many of the global banks are facing calls from investors, analysts and regulators to break up their businesses, to maximise value or to improve their risk controls.

The breakdown of the capital markets will undermine the ability of the bulge bracket banks to dominate the corporate advisory business through offering privileged access to its balance sheet and capital markets businesses.

Property companies may also see a trend towards specialisation. Land Securities continues to work on breaking up its business into its component parts and Capital and Regional has announced it is moving away from fund management to focus on specific projects.

Will the business environment follow my fridge with the re-emergence of the niche players, who provide expert, impartial and specialist advice with a personalised service.

Only time will tell… Either way, back at Ellandi, Mark and Morgan are happy to help…

Having initially avoided overt publicity of our new venture, we decided to dip our toes in the water of celebrity culture and give an interview to Estates Gazette Capital.

Despite harbouring concerns that we would be stitched up like kippers, we’re quite pleased with the coverage James Wallace has given us; as it says in the article, all we have to do is prove now that we are the “real deal”.

Please click on the link below to read the article.

egc-june-08-ellandi

For any of you, who’s idea of a good holiday is not reading books on economic theory and the origins of the credit crisis. I imagine that covers 99% of the population…

Rather than follow up on Mark’s reading tips, in his book review blog, you could follow the evolution of The Subprime Debacle with the help of the stickmen, takes 2 mins, is funny and actually very accurate.

Sub-prime Stickmen 

Now you can just chill out on the beach and enjoy the view…

I have suspicions that my wife suffers from SAD (Seasonal Effective Disorder) which means that during the dark winter nights (which do not fly-by at Chez Robinson) she gets on the Internet and books up lots of holidays during spring.

As a result we are usually broke by Summer, but it does give the advantage of being able to share with you a quick review of a few books I’ve read.  These are the type of books that you hope that on your return to the office you will be able to con your colleagues into believing that you understand high finance (Morgan has yet to fall for this):

The Black Swan (Taleb)

Not for the faint hearted.  Probably the most influential economics book this decade and boy to you have to work at it.  Interestingly it was written before the Credit Crunch, the unpredictability of which, it predicted.

A summary is not straight forward, but here’s a stab at explaing the contents:

-You cannot predict the future from the past.

-Peoples view of the past is basically story telling in their own mind to make sense of difficult concepts.

-You don’t know what you don’t know, and because you don’t know what you don’t know, you can’t predict what you don’t know (as Donald Rumsfeld would have put it).

-Because you don’t know what you don’t know, you can’t eliminate risk, but can prepare for it.

Plot Synopsis: Bad things happen; occasionally and randomly.

The New Paradigm for Financial Markets (Soros)

It’s hard to knock the big man as he’s undoubtedly made more money than you or I ever will.

Unfortunately, this book reads like it is; an incredibly successful gambler and (to be fair) student of the human condition, trying to justify his hugely successful life in terms of cod-psychology and philosophy.

Even his son suggests his investment strategies are largely down to the effects of his bad back.

Nevertheless, not a bad read, if you skip the middle bit of mumbo-jumbo (as he suggests), and a very good history of the credit crunch.

Plot Synopsis: Bubble markets feed on themselves and we’re at the end of a 40 year one so we’re all knackered.

The Gods That Failed (Elliott and Atkinson)

Like Soros’ book, a very good description of the events that have lead to our current crisis.

However rather than study the human condition, the authors have cooked up a large conspiracy theory based on a shady new world order of “New Olympians”.  This nefarious bunch includes the usual whipping boys of the anti-globalisation movement: bankers, the IMF, corporations, politicians, the EU (Yes, that hotbed of free market fundamentalism?!), etc.

Plot Synopsis: Bankers and politicians are greedy b*stards who are only driven by self interest (like you don’t say); so we’re all really knackered.

I always wondered if my university lectures on game theory and their practical use in every day business would be relevant and finally they seem to be….

What is he on about I hear you ask? The prisoner’s dilemma is based on the concept that individuals will always act selfishly to protect themselves even if a cooperative (collective) solution would be mutually beneficial to all.

See: http://en.wikipedia.org/wiki/Prisoner’s_dilemma

The UK property business is currently griped by a liquidity crisis, not a credit crisis as is generally reported. The liquidity crisis stems from the facts that the banking industry has on mass turned off the supply of money to property investors whether they are large or small, capable or incapable. This inability to borrow is having the effect of starving the market of capital and given that property is possibly the most capital intensive business in the world it has lead to a state of paralysis.

You can not buy, so you can not sell. There are no comparable trades so you can no longer accurately value a property. The spiral goes on…

Under such circumstances it is perfectly logical that a bank should choose to avoid lending money to a property investor. If markets fall then the bank may well lose money, this is a big risk when the bank is already carrying a major exposure to the sector through its existing loan book.

However, if every bank takes this logical individual decision to withdraw from the market, at least temporarily (most of them have already done this) the individually logical action becomes a collective illogical (not to say disastrous) decision.

Through withdrawing liquidity and the availability of capital entirely the banks would create a vicious downward cycle whereby capital values are forced to fall until cash buyers can establish a clearing price. This would create enormous value destruction and the banks would collectively and individually lose more money through losses associated to their existing lending book than they stood to lose had they continued to lend and written the occasional bad loan.

What is required today is for the big banks to show leadership and to make collective policy decisions. If this does not happen then the liquidity crisis is likely to mutate rapidly into a credit crisis as property values fall and the banks experience major losses.

Game theory has been around since the 1950’s, it was often used to model super power relations, maybe banking leaders should start to work collectively before the situation goes nuclear?

Advised by Savills, we have recently acquired the former police station in Beckenham.

This impressive Victorian building will, we hope, lend itself to conversion into two restaurant units with eight luxury flats above.

Negotiations are progressing well with a high quality restaurant chain for the main unit and a planning application will be submitted this summer. 

We won’t be finishing the project until 2009/2010, so should be selling into an improving market!

Attached is an indicative layout of the commercial element, please contact us or Cormac McNabb (020 7409 8166) at Savills if you would like further details.

beckenham-restaurant-01