This article originally published in The Northern Daily Leader on 23 July 2011.
The ‘Do Not Call Register’ is a great idea – apparently signing up to the register means you won’t be troubled by pesky telemarketers, who have a knack for knowing when you have just sat down for dinner. Last week, while my wife and I were preoccupied with convincing our six month old son Jack, that liquidised pumpkin is a tasty food source, we were interrupted by a telephone call from ‘Brian’. In hindsight we should have just ignored the call, but we had been expecting a call from a family member.
Brian seemed to have skilfully evaded the restrictions of the ‘Do Not Call Register’, as it quickly became clear that Brian was neither friend nor family. However he did have some alarming news – apparently his company (which he failed to name) had detected, over the internet, that our home computer was corrupted or infected by viruses. Much of the conversation was actually inferred, as there were some language difficulties, but the gist of the call was that we needed to switch on our computer immediately and Brian would help us resolve our problems. Naturally, feeding Jack was more pressing, so we declined Brian’s advice, though I did get his number to call him back later.
Once dinner was finished, I entered Brian’s telephone number in Google, and was rewarded with a lot of information and many complaints about Brian’s employer. Apparently Brian was planning to show us the error log on our computer, which always contains a large number of innocuous warnings which have no impact on the ability of your computer to work correctly. Brian would then convince us that the only way to ‘fix’ these problems was to install (and pay for) some software provided by his company.
Essentially Brian wanted to sell us a product we didn’t need, by identifying a problem we didn’t have (and it wasn’t even illegal). Unfortunately there are also (still) many ‘Brian’s’ in the financial services industry – despite a lengthy ongoing process to clean up the industry, some financial advisers identify problems you don’t have and then try to sell you products you don’t need. Your response should be the same as mine – do some research, talk to friends or family and don’t feel compelled to do anything that makes you uncomfortable. And could somebody fix the ‘Do Not Call Register’!
Bubble in Paris
This article originally published in The Northern Daily Leader on 9 July 2011.
Life as a Parisian hunchback in the 18th century must have been a challenge. More likely than not the object of public disdain and ridicule, as suffered by Quasimodo, the titular protagonist in Victor Hugo’s The Hunchback of Notre Dame, it’s fair to say that there were probably few situations where being a hunchback was an advantage. However, one of the greatest financial bubbles in history provided an opportunity for one enterprising 18th century hunchback.
In 1719, an inventive Scotsman, John Law, established the Mississippi Company, which was granted exclusive trading rights to the East Indies, China and South Seas by King Louis XV (Law had fled to Paris to escape the wrath of the authorities following a fatal duel over the attractions of a young woman). Through a combination of clever marketing and royal patronage, Law was able to convince his fellow Parisians that an investment in the company was simply too good an opportunity to miss, with a promised initial income return of 120%! So enthusiastically did the citizens of Paris respond, that the street outside Law’s house became thronged with budding investors, desperate to purchase shares in the company. Day and night people gathered in the Rue de Quincampoix, frantically trading back and forth shares in the Mississippi Company, speculating that the stock price would continue to rise inexorably higher. The eagerness and desperation of the speculators provided the perfect opportunity for our enterprising hunchback, who, according to legend, earned a sizable fortune for himself by renting out his hump as a writing-desk to the would-be investors.
As it turned out, providing writing-desk services to the eager investors was probably more profitable than investing in the shares of the Mississippi Company. The promised riches failed to materialise and the company and the private bank Law had established to finance it collapsed in flurry of worthless pieces of paper. The lesson learned by those over-enthusiastic Parisians is as relevant today as it was back in 1719 – if it’s too good to be true, it usually is. Too often we see ordinary Australians being duped by the modern-day equivalent of John Law and his exciting yet ultimately worthless investment opportunity. So whenever a ‘John Law’ comes your way, be a sceptic first and a believer second. The Mississippi Company wasn’t the first speculative bubble to collapse, and it certainly won’t be the last.