London Calling…

                I spent much of this past week in London – save for an afternoon meeting in Zurich – and was quite surprised by what I saw. The English have always impressed me with all their stiff upper lips (I grew up in Hong Kong when it was still an English colony). With the broader Euro zone upside down and potentially unwinding, Greece and Portugal looking over the bankruptcy precipice, civil unrest in most European capitals, and the resignation of their Defence Minister in scandal (they spell it funny there), the Brits continued to go about their merry ways.

                While there the September unemployment numbers were released:  the unemployment rate now stands at 8.1% – a full percentage point below the US rate. Amongst all the hand wringing was a sense that the UK economy was doing ok, thank you very much. There was evidence of reasonable consumer strength and while prices were ridiculously out of control – it seemed as if every five minute taxi ride was 15 pounds ($24) – there were no shortages of Bentleys, Porsches, Bugattis and Lamborghinis. It could also have just been that all the Russian Oligarchs and Middle Eastern Sheiks decided to go for a drive at the same time.

                One of our biggest issues in the US is the absolute freaking dearth of IPO’s – extremely frustrating and disheartening – so imagine my intrigue with the article titled “Newcomers Provide the Only Buzz for Overtired AIM (stock exchange)” in Thursday’s Financial Times. I expected yet another article lamenting the absence of public offerings in the UK just like in the US. Point of fact there have been 22 IPO’s in 3Q11 in the UK. Those companies raised 205 million pounds and covered a fascinating range of industries: the obligatory internet/ biotech/mobile marketing companies but also water purification, African agricultural and coal importing companies. Quite impressive I thought.  Interestingly though the AIM was not the most active stock exchange in Europe this past quarter – Warsaw saw 54 IPO’s on its stock exchange.

                One other set of observations – perhaps more troubling – was how many of the sophisticated financiers I met look at the current US situation. Notwithstanding the vast pools of capital across Europe all struggling to find investment returns greater than the 3-month LIBOR of 30 basis points available today, there was a collective apprehension to invest in the US innovation economy. That is simply baffling – we have a significant PR problem – if we cannot look more attractive than investment opportunities in Europe’s backyard (Greek bonds anyone?), that is a problem. The protracted infantile budget debate this summer hurt us more than we perhaps realize.

                The innovation economy is now comfortably a global phenomenon. We all know that but it is always entertaining to be reminded of that when traveling abroad. The problem is we should own it outright, and after a week in Europe, that just does not feel like the case right now.

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