Life in Venice

I've just been in Venice, at a conference of stockbrokers and investment managers. As you do, when financial markets are collapsing. As one speaker said, where else would you go but a sinking city?

It was of course all arranged when times were good. And in many ways it was better for them to be away rather than at a desk getting despondent. There were a lot of good speakers: overall, the mood was surprisingly optimistic about the world economy especially taking a long view. My sense is that we are starting to see an end of share market declines (interestingly one of the speakers had predicted in January that there would be a bear market in 2008 with a maximum low at 3.30 on 14 October):

- The current selling is by people having to sell to get cash: equities are the easiest thing to sell. Plus some are starting to panic. This will eventually stop. Those who need cash or who panic will have sold all they can.

- The problems are starting to be understood, Governments are moving from talking and pontificating to actually doing something.

- Lastly, Asian growth could still be strong.

The short term problems aren't share markets - it doesn't really matter if they fall for a bit. It's that the banks are in a mess, by having lent too much. And this stops money moving.

An accounting joke from the conference: Banks' balance sheets have two sides, liabilities on the left and assets on the right. The trouble with banks is that on the left, there's nothing right, and on the right, there's nothing left.

Oh, how we laughed.

An accounting joke is very suitable for Venice. Venice's main claim to fame is that it is the birthplace of double entry bookkeeping. Some people go on about the mercantile empire, the exploration, the Carnival, the romaticism and perhaps most of all the timeless beauty. But to be the foundation of accounting: now there's a real legacy.