The topic of the falling burglary rate in western countries has always interested me. It seems a fair bet that burglary has been in decline because there is less point to stealing stuff such as televisions and DVD players.

I wrote a column about it in 2004, which included this paragraph: 

Blue-collar crime has suffered a similar fate to blue-collar work over the past two decades. Just as changes in technology and globalisation have reduced the number of well-paid jobs for unskilled and semi-skilled workers in industrialised countries, the financial returns to burglary have fallen. Televisions are now made in China so cheaply that they are hardly worth stealing.

Anyway, the topic has just been taken up again by Tyler Cowen at Marginal Revolution and Felix Salmon. Felix posits that burglary may be about to rise again as a result of the credit crunch.

On the other hand, one positive for burglary was the rising price of gold - it was worth more to break into people’s houses for their jewellery. So it is further bad news for burglars that gold has been plummeting this week.

You win some and you lose some has always seemed to be Virgin’s business model. In the case of Virgin Mobile USA, the pre-paid phones venture of Sir Richard Branson’s Virgin Group, it has been mostly the latter.

Virgin Mobile USA has put in a spectacularly bad performance since its US initial public offering in October. It floated at $15 a share and closed yesterday at just over $2 a share. It has dropped steadily since the IPO and last week lurched downwards on a gloomy earnings forecast.

The business is a joint venture with Sprint Nextel which sells pre-paid phones aimed at young people. It has been doing badly in a soggy market: there is increasing competition among operators and the US shows signs of being near capacity for mobile phone penetration.

Things are not particularly great for mobile operators and manufacturers in general at the moment. Sony Ericcson issued an earnings warning yesterday and its shares - and those of Nokia - both fell sharply.

Sir Richard can take comfort that Virgin Group offloaded about 11 per cent of its original 47 per cent stake in Virgin Mobile USA in the IPO. On the other hand, it still holds about one third of the company.

Nor does it help his sometimes strained relations with stock market investors. Some of his misadventures were detailed in this FT article.

This is my review of Richard Florida’s Who’s Your City, his new book about the rising economic strength of cities compared with the suburbs and countryside. I liked it a lot although I did have one criticism of the format. You can read the review here and post comments below.

The world moves fast these days. Barely has one heard of something than it turns into a phenomenon.

Take the Clover filter coffee machine, which I learned the other day from perusing a local blog is an $11,000 machine that somehow makes better filter coffee than almost any of the alternatives.

It is being installed in a coffee bar that is about to open up near the subway station I use every morning so I was planning to go in and try a sip.

Now Starbucks announces that it is buying the company that makes the Clover and will start installing the machines in all many of its outlets. It is part of Howard Schultz’s plan to bring some sorely-needed magic back to his chain.

If all Clovers are going to be commandeered for Starbucks outlets, does that mean it will try to confiscate the Clovers that are already out there? Presumably not, in which case my  local machine will have scarcity value.

Somehow, however, my anticipation of trying a Clover-brewed coffee has been spoiled by the disclosure that there will shortly be one on every street corner.

My Financial Times column this week is about Bear Stearns and how it was not merely a victim of the credit crisis because its leaders brought it on themselves. You can read it here and comment below. 

Time lends perspective and having a couple of days to absorb about how the Federal Reserve acted over Bear Stearns has helped to clarify its intervention policy, which was devised on the hoof over the weekend.

Although there was a lot of worry about moral hazard - the US government protecting those who should not be protected from their financial errors - the Fed clearly tried to avoid it. It wanted to prop up Bear to avoid a fire-sale of its mortgage securities but did not want to give too much comfort to others.

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Well, no-one can complain that Erin Callan, Lehman Brothers’ new chief financial officer, lacked detail on the investment bank’s first quarter results conference call this morning.

Ms Callan rattled through a very long and thorough explanation of the bank’s earnings, balance sheet and liquidity, with the emphasis on the latter.  Given that Lehman has been fighting to persuade people that will not become the next Bear Stearns, that was wise.

Ms Callan faced some credibility questions. She has only just been appointed to the job, lacks an accounting background, had to take an exam before starting, and gave an interview to Portfolio in which she emphasised her interest in strategy rather than number-crunching:

“I see myself in more of the strategic camp. When you don’t grow up in the accounting profession and you grow up more as a deal person, your bias is to look much more at the big picture.” Otherwise, she says, “you really could consume yourself entirely just staying in the weeds.”

She obviously realised, however, that in the weeds is where investors and other banks want her to be at the moment. To judge by the market reaction, she convinced them.

Curiouser and curiouser. Perhaps when the dust settles from the JP Morgan Chase/Bear Stears deal we will look back on it primarily as a smart property deal. JP Morgan made sure that it not only got Bear Stearns’ head office at 383 Madison as part of the takeover but can buy it even if the takeover falls through.

Jamie Dimon, JP Morgan’s chief executive, apparently wants to reverse the plan to move JP Morgan’s investment banking and trading operations into a new building on the former World Trade Center site. As Felix Salmon notes this is a service to architecture since its planned building looked ghastly.

Mr Dimon cut a mean deal, albeit assisted by the Federal Reserve putting pressure on Bear’s management to sell out. The Journal points out that his option to buy 383 Madison for $1.1bn even if the takeover is voted down by Bear shareholders looks like a good alternative since it could be worth $1.4bn (at least at current Manhattan prices).

Apart from that, it is a blow to the reconsolidation of Wall Street downtown. Goldman Sachs and JP Morgan were both due to be near the WTC site and this deal leaves Goldman looking a little lonely, although it got a lot of money from New York to move there.

At least one of the other towers on the WTC site has room for a bank trading floor but none of the other Wall Street firms has so far signed up. With Mr Dimon sticking to midtown and prospects for commercial property in Manhattan uncertain at best, the prospects of Wall Street heading back downtown look slimmer.

From the Wall Street Journal: 

Amid heightened concerns over the state of the world financial system, George W. Bush gave assurances Monday that capital markets are working smoothly, adding that the US is “on top of the situation.”

There has been much fuss lately about distorted incentives in bankers’ pay that encourage them to take excessive risks because they do not suffer the full consequences of failure. I have written about it myself.

The Bear Stearns collapse shows the other side of that argument. Financial News estimates that Bear employees, who own about a third of the equity through stock bonuses and pension savings, have just lost a collective $5.2bn based on the sale price to JP Morgan compared with the share price of Bear in December.

Even divided among 14,000 employees, that is plenty of money. Because of the way in which bonuses are paid on Wall Street these days, with the bulk issued in shares that only vest after three to five years, they had little choice but to be heavily invested in the fortunes (and now misfortunes) of their bank.

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