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EDITIONS
The Money Programme Thursday, 8 March, 2001, 08:09 GMT
more dot gone
Tx: 19.30, 14 March, BBC 2

"The Great Dot Con"

From Amazon to Last Minute, dotcom shares have crashed. Why? The Money Programme reveals that the internet share bubble was pumped up by the very people supposed to provide investors with impartial advice, exposing a flaw at the very heart of our financial system.

Exactly one year ago dotcom fever was raging on both sides of the Atlantic. New internet-based companies, with little business and no profits, were valued at billions of pounds on the world's stock markets. Suddenly the fever evaporated along with the value of dotcom shares, leaving millions of investors poorer and threatening the health of the global economy.

Small investors, who were caught up in the boom, now feel deeply disillusioned.

One of them was Donald Demar, a 71 year old retired grocery shop owner. He invested over two hundred thousand pounds in a dotcom company to help provide an inheritance for his grandchildren. Now that investment is worth fifteen thousand pounds and Donald is angry. "I feel" he says, "as if I was walking down the street and someone stole my wallet"

At the height of the boom new internet share issues were being launched almost every day, generating billions of pounds in fees for investment banks and brokers. At the same time, some 'analysts' employed by the same banks and brokers - supposedly to give unbiased advice to investors on what to buy and sell - kept advising investors to buy, buy and keep on buying.

Tom Brown spent twenty years working on Wall Street as a share analyst, paid well over a million dollars a year. He believes that there is now a deep - and damaging - conflict of interest at the heart of some of the world's most powerful financial institutions.

The leading banks earn huge fees from companies for launching new share issues and advising on mergers and acquisitions. And analysts who don't recommend the shares they follow risk losing business for their banks. This conflict of interest played a major role in pumping up the share bubble to absurd heights. "It was Wall Street at it worst" according to Tom Brown.

Nils Blythe talks to Amazon boss Jeff Bezos, bankers, brokers and investors to uncover the causes of the dotcom share bubble, why it burst and the real winners and losers of "The Great Dot Con".

Links to more The Money Programme stories are at the foot of the page.


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