Comment: $100bn float that will have the stags strutting

WHATEVER the future holds for his internet sensation, Facebook founder Mark Zuckerberg is doing rather more than merely selling a stake in his business.

Rarely does a company come to market with a sales pitch that could describe it as a way of life, a friend-maker, an addiction, a new business tool, a potent weapon against oppressive states.

Today, Facebook also becomes a stock market darling when its flotation will value it at more than $100 billion (£63.2bn) and a lot of people, including those who have agreed to sell more of their holdings in the company, will make an instant fortune.

Spread betters are predicting the shares will rise by some 40 per cent within hours, providing a substantial return for the stags – those who buy in expectation of an immediate profit.

Yet Facebook’s rapid rise could also be a warning to all. Advertisers have gone cool, including Kia and General Motors, the latter deciding to withdraw because it sees no evidence that Facebook helps it sell cars.

This has raised concerns about Facebook’s longevity and whether or not it has truly changed methods of communication forever, or is nothing more than a passing fad that will be replaced in time by the next big idea.

For now, the only way is up and Facebook is taking a number of others along for the ride. The Facebook app industry is worth an estimated £467m in Britain alone and the company is said to pump £12bn into the European economy.

Facebook supporters are unimpressed by General Motors’ comments, pointing to the way in which companies use various non-advertising based campaigns through Facebook to promote their wares.

This is an evolving technology and today will be another milestone in Facebook’s short life. It will also bring it into the fold with its new media counterparts: Google, Groupon, LinkedIn and Yahoo. All, except Groupon are trading above their flotation price and there is every reason to believe Facebook will follow the majority.

Dream that has turned into a nightmare

A CRISIS calls for leadership and David Cameron seized his opportunity yesterday, using a speech in Manchester to promote his credentials as a statesman in full control of operations while the rest of Europe teeters on the brink of currency disaster.

The swell developing in the eurozone and threatening to engulf at least the weaker states, taking the euro down with it, has given the Prime Minister a perfect platform for his deficit reduction programme, or at least a diversion from the UK’s own failings.

Britain was first to see the storm coming and to put its house in order. Like it or not, the austerity plan is responsible for the country’s continued favour with the credit agencies, for its low bond yields and the strong pound.

But it is not all plain sailing. By being first in, we are also providing a warning sign to the rest of Europe of what to expect. Britain is in recession while the eurozone is not.

This last point, however, is a technical one. The eurozone was only saved from itself by the strength of the German economy.

Recession aside, the currency crisis is now reaching the epicentre of the storm with little hope that the 17-member club can survive the increasingly treacherous waves. Far from uniting Europe, it is now the cause of a major rift that will tear the eurozone apart. Yet the euro members are clinging desperately to this storm-tossed wreck hoping it can survive intact. Surely there are enough signs to indicate the contrary. Depositors fleeing Greece, taking €lbn (£800m) a day out of the country, its businesses choosing not to repatriate overseas earnings.

The Greeks have the right to choose whether they stay or leave the euro, but it is time the Germans and others told them that their time is up.

In all probability they are too afraid to do so. Far from wanting Greece to remain, they are worried that the country, with its reconstituted and devalued drachma, will quit the currency, rebuild through cheaper exports and challenge those still holding on to the euro dream.

And that is what the euro was from the start: a dream among politicians who would not accept that it was not possible to unite 17 economies operating at different speeds without full political union.