Morgan and I attended the Association of British Property Bankers Conference last week.  A jolly event it was too, as you can imagine.

Rather bravely it was held on at the top of the Lovell’s rather opulent offices, that offered a balcony and eleven storey drop for those who really think this might get as bad as the 1930’s.

Generally the quality of the speakers was pretty good, although I think the chances of getting any of the bankers present to lend on retail after Dr Barry Gilbertson’s analysis of the occupational market will be slimmer than a Brazilian super model.

Special mention must go to Paul White for eschewing the tried and tested rules of presentation, no fancy PowerPoint, just head down and read your notes written in long hand.  I say read, but it was more of a rant  and whinge, a “ringe” or is it “want”?, he certainly wants the banks banks to start lending to Frogmore again.

How he hopes to achieve this by launching a “scathing attack” on them is beyond me; perhaps Mrs White could send him on a Dale Carnegie course?

As Jeremy Warner in today’s Independent puts it:

“Forget the blame. If they haven’t got the money they can’t lend it.”

http://www.independent.co.uk/news/business/comment/hamish-mcrae/economic-life-can-a-shrinking-financial-industry-survive-the-regulatory-backlash-941481.html

Alistair Darling, our Scottish chancellor, has been quite categoric that the blame for the current financial crisis should be attributed to The City.

So Northerners should blame their greedy Southern cousins! 

Just a minute, lets have a look at a few of those that have been hardest hit. The clues are in the names - Northern Rock, Halifax Bank of Scotland, Bradford & Bingley…

Maybe not so blameless up North?

If you went on holiday last week, a cursory glance at the FTSE 100 could persuade you that you did not miss much. The market opened last Monday at 5,238 and closed on Friday at 5,335. A modest gain of 1.8%, so you probably didn’t miss much….

How statistics can lie. During the most incredible week, we saw the demise of Lehman, Merrill, HBOS and AIG. A series of events that would have sounded preposterous only days earlier. These events were of such magnitude that everyone from tabloid hacks to esteemed economists have suggested that this could herald the end of the financial system as we know it and the start of a new era.

In a fascinating article, Robert Skidelsky argues that the enormous steps taken by central governments to nationalise Fannie, Freddie and Northern Rock and to support the financial system represent the end of Neo-Classical conservative economics and a return to Keynesian Liberal economics, where the state regulates, supports and creates markets. See http://skidelskyr.com/site/article/farewell-to-the-neo-classical-revolution/. In effect a step back to the 1930’s.

What does this mean to a humble property business like Ellandi. We will have to wait and see… It is unlikely we will see another week as eventful as the last but I think it is inevitable there is worse to come. I say this for two reasons. 

There remains a liquidity crisis - banks are reluctant to lend to each other, let alone to corporate or retail clients. In order for there to be stability, let alone growth, we need confidence and liquidity. Neither is likely to develop in an environment where even banks are reliant on state support to prove they are solvent. There will need to be a period of ongoing pain and further asset right downs until people have confidence that balance sheets reflect their true worth and trust that an orgainsation is creditworthy.

We are yet to see the full force of a credit crisis. Falling consumer and corporate demand will result in losses for many companies, combined with the lack of liquidity, this will inevitably lead to an increase in corporate bankruptcies. Setting Lehman aside, we are yet to see this impact on a large scale. It is likely to result in job losses, a fall consumer expenditure and economic contraction spreading beyond the City of London into the wider UK economy.

I can not offer as eloquent an economic arguement as Skidelsy but we have all enjoyed a very long period of economic growth, sustained by corporate and personal leverage. The world is now “de-leveraging” and the result of which will be a painful hangover. To date, this pain has been largely theoretical for most people and unfortunately it will need to be felt by more people before the green shoots of the next growth period can germinate.

Until then banks and property companies are likely to batten down the hatches and the HMS Ellandi will continue to focus on restructuring distressed property deals. There could be quite a few around…

About 12 months ago, the RBS led consortium paid the market rate for ABN Amro, outbidding Barclays in the process.

Barclays have now paid £1bn for Lehmans US investment banking arm, catapulting them into the big league at a fraction of the price.

It is scary to consider that earlier in the week, £54bn would have bought Barclays, Lloyds and HBoS (LBos?) and Alliance and Leicester.  With the small change left over they could have that small grocery chain Marks and Spencer.

Of course the market has fallen further this week, so they probably could now buy British Land too.

It would appear that most people are now back and like truffle pigs are digging around in the mire looking for green shoots of recovery.

I am doing my bit; sprinkling Prozac on my Cheerios every morning and only reading Anatole Kaletsky’s column in The Times helps.  I also try to go by the maxim of “If you can’t say anything nice don’t say anything at all”; mother would be so proud.

In fact to paraphrase Churchill, I was staring to feel that we had reached the end of the beginning; the optimist in me was hoping that we could start talking about the “Post Credit Crunch” world due to Mr “Hank” Paulson’s generosity at the weekend.

Unfortunatley my panglosian view, however, has been undermined by the slow motion accident that is Lehman Bros.

Not only is this a shame, in that it only serves to undermine fragile confidence that was building, but we know a lot of good people there and it can’t be much fun.

I can’t believe that Lehman’s, per say, are markedly any worse than many other investment banks. 

The financial markets seem to be operating within a playground mentality: a gang of kids will always pick on the weediest one, because at least it’s not them recieving a wedgy.

Now they have succeeded in destroying the Lehman’s franchise, who’s next?

The letting of the last remaining unit in the Jubilee Street development Brighton has now completed to Giraffe.

Giraffe will make a welcome addition to a tenant line-up that already includes Carluccios, Tesco, Yo Sushi, Starbucks and Headmasters.

Well not if you’re Gary Glitter or for that matter anyone in the property industry returning from holiday hoping that things were going to be different in September.  

I’ve just got back from the ususal short, restfull break in Ibiza; kids are far more tiring than clubbing ever was.

I went to Pacha once, after which one wag back in London asked if they have an OAP section in addition to a VIP section; I am in fact 4 years younger than Roger Sanchez, thank you very much Mr Tilbury.

I actually came back in a positive frame of mind about driving the business forward and was delighted to see the government talking up our collective prospects.  I don’t know what Alistair Darling has against 1948; having looked into this I can confirm that exactly 60 years ago was a good year for petrol heads; the Land Rover was invented, and a bad year for bald Indian pacifists; Ganhdi was assisinated.

But at least, James Max, The People’s Champion, is here to save us all from the bank’s and right their many wrongs. 

How not having a successful career in property and then not winning a reality TV program, qualifies you as a TV pundit and journalist is quite beyond me.

To busy to see you James? 

I’m sure Sir Fred Goodwin would love to make time to see some bloke who came third in The Apprentice three years ago if wasn’t tied up watching big brother, eating orphans and drowning kittens.