30JUN08:
Oil to be USD200 by 30OCT08
USA Inflation to be 7.5% by 30OCT08 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ... 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, Lehman (a bit late I know) 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon The Big Crash: 17OCT07
...well it's here 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first
Markets have been in denial for a number of months now but all the signals are there for an almighty crash. Not one for sounding pessimistic - in fact I am the complete opposite [Editor:You are in denial too] - but I have to come clean.
August has been a shocker. A couple of my funds have performed well but the others are struggling with the consequences of deleveraging and having to sell assets without the market seeing it is as a distress fire sale. Why? My Prime Brokers credit lines have just stopped. Redemption notices are making the situation worse and my staff are getting edgy - not that they can look at jumping back into Investment Banking because it looks even worse there as the banks are putting in hiring freezes or starting the cost cutting programmes as mentioned yesterday.
A great way to start the weekend.
So forgive me if the news items are a little offbeat but it takes the pain out of the sting. It may seem fine where you are sitting but believe me, and not trying to sound like Jim Cramer, these are markets like I have never seen before - volumes are very low and spreads are widening and there is mass uncertainty which is working against us all. We have bin laden trades, a dead commercial paper market, prop desks hoovering up banks capital, off balance sheet schemes kicking, bad debt provisions, a two tier lending system, governments and nanny central bankers feeding us medicine, and worst of all the sneaking suspicion that this really is the start of massive, and I mean massive, stock market crash like we have never seen before. Or it could just be a summer cold.
My favourite toy is to be destroyed by Microsoft.
The Great Depression is upon us.
Barclays borrows from the Bank of England to bail out a hedge fund - Cairn Capital.
Investors start to bail out of Russia.
One third of the Hedge Fund industry is to be wiped out.
DB starts to slash its workforce (as predicted - the German banks are in a real old state)
Rating Agencies start firing their own staff for starting this mess.
Bush looks to save the subprime homeless.
Banks to slash 15% of workforce in first round of cost cutting.
Academics complain Hedge Fund salaries are too high (no surprise there then)
Money Never Sleeps Humor is one way to tackle the problems we all face. This is not very funny but at least it's a distraction. Hope you like the Money Never Sleeps poster.
As expected, the sequel to Wall Street 2 is going to be based in London because New York is too local and is no longer big in finance. To help the scriptwriters come up with some good Gekko quotes, now he is a hedgie cum pirate, here are a few starters;
"Regulation is for rookies" "There is only one g in hedge" "Johnny Depp is to pirates what Gordon Gekko is to market manipulation" "Fundamentals are for buffoons called Warren. " "Remember the 3 L's. Lie, Lock and Lever. Tell them their dreams will come true, lock them in, and borrow as much as you can to maximise your performance bonus." "Only the guilty give away what they earn." "If you are going to lose money, lose it big. Investors cannot sue you if you have blown up completely." "Make your investors smile. Rolexes and whores are great comforters when their investments are down " "You can never have a big enough yacht" "Spending other peoples money is a science. Never paying it back is an art." "Covered shorts are for wimps" "Big balls are for dandies" "Power is being able to make the markets move." "Owning people is the route to success." "Wimps are for the Investment Banks. Trading with a fat balance sheet behind you is like running naked down a street at night." "Getting in is easy. Getting out is where I come in."
Quote of the day "Cairn (Capital) are rare amongst asset managers that they only bring deals where they wholeheartedly believe they can deliver enhanced returns through the life of the transaction. They identify where value exists in the credit market at any time and are nimble in developing transactions to access that value. Cairn then brings a transparent and open reporting dialogue with investors which we have found compelling" Bradford & Bingley
RIM shares up on Microsoft talk (bbc) Shares in BlackBerry-maker RIM have touched new highs on speculation that Microsoft was contemplating making a bid for the firm.
There are rumours that Microsoft is interested in the Canadian firm after Google said it was considering making its own mobile phone operating system.
However neither firm has commented on the speculation.
RIM's shares ended up 1% at C$87.71 ($82.94; £41.18) on Thursday, having hit a record C$89.68.
However observers have questioned whether Microsoft buying RIM would make sense - not least because the firm's C$50bn valuation means it would not prove cost-effective.
Fintag says My blackberrys have worked well for the past 5 years. The device is smaller and better than ever and synchs well with Microsoft Outlook and allows me to write this newsletter when on the road. My IT geeks love it, my security people love it and so do all my mates.
But Microsoft are threatening to ruin the party. This is the worst news I have heard all year.
If only Apple would counter bid ... I like things to be simple and Microsoft have this way of making things very complicated that fall over too. There motto should be
"When one click will suffice, make it five instead - with a random chance that it will not work when you have clicked."
GLOOMY
Risk of redemptions loom over 2,000 hedge funds (financialnews-us) As many as 2,000 hedge funds could be vulnerable to redemptions as investors rush to recover their assets, increasing the number of companies seeking bankruptcy protection while the credit debacle builds.
A report by Morrison and Foerster, an international law firm with a hedge fund recovery team, singles out hedge funds with assets based on credit derivatives -- which are infrequently traded and therefore difficult to value -- as most vulnerable to redemptions.
The risk of redemptions is higher for hedge funds compared to private equity funds, because the period during which investors cannot access their investments is shorter, 90 days or less, making it easier for them to withdraw their funds.
According to the report, nearly a quarter of the 9,000 hedge funds with an estimated $1.5 trillion in assets are at risk.
The report says: “Some foresee an increased risk of both margin calls on hedge funds' highly leveraged positions, and consequent distressed sales of such hard-to-value assets, all forcing prices and values even lower.”
A margin call occurs when one or more securities purchased from a company decreases in value beyond a particular level. At that point, a broker demands an investor use margin to deposit more money or securities to restore the fund to a minimum maintenance level.
As investors' fears over being last to recover assets increase, the chance that they will be reduced in value, creates a “run on the bank” scenario amid competition, according to the report.
Larry Engel, a partner with Morrison and Foerster, said the number of companies seeking alternatives to bankruptcy is declining. For the holders of credit default swaps, which allow buyers to hedge against the risk of default by debt issuers, bankruptcy offers an attractive way for these CDS holders to get back their investment.
Engel foresees that Chapter 15 bankruptcy protection proceedings, which deal with cross-border bankruptcy, will increase and will complicate investors' efforts to redeem their contributions as two-thirds of hedge funds are registered in the Cayman Islands.
But in a striking development that could signal how US judges will treat companies using the two- year old bankruptcy provision, federal Judge Burton Lifland denied a request by Bear Stearns' two collapsed hedge funds to recognize the Cayman-Islands bankruptcy case as having primary jurisdiction, and ruled that the US was where they conducted their main business.
In his ruling Lifland said: "The only adhesive connection with the Cayman Islands that the funds have is the fact that they are registered there."
Steven Caruso, a partner with Maddox Hargett & Caruso, one of four law firms representing Bear Stearns investors in the suit, has voiced concern that the laws governing hedge funds in the region do not provide the level of protection for creditors or investors that a US venue offers.
Fintag says These sorts of headlines were bandied about in 2002 but most people weren't interested. In fact the Hedge Fund industry exploded.
I think to say one third of hedge funds will go down is a little exaggerated - but then I guess when Hollywood started out many of the new independent film studios went under. Wasn't that during the great depression though? Spooky.
A few amateur day trader hedge funds will (and should) go down as well as the arrogant "eggs in one basket" traders who left Goldmorgan Stanley and have been playing with their previous employers capital (who need it back because of the liquidity crunch) and face the reality that daddy has run out of money. The rest will survive because they just will. Fingers crossed.
Mind you, since most of the liquidity in the markets is created by hedgies (equities and bonds plus m&a), we will all suffer. The Prime Brokers will have less work, the banks have less deals, the markets will be more volatile and unemployment will hit us all.
Thank goodness this story will proven to be wrong.
Leading lender likens US credit crisis to Great Depression (guardian) he US financial industry displayed fresh signs of distress from the credit crunch afflicting global money markets yesterday, with one mortgage provider describing lending conditions as the worst since the Great Depression of the 1930s.
Leading accountancy firm H&R Block revealed huge losses at its up-for-sale mortgage arm, Option One, and said it was considering a halt on new loans. Reporting a quarterly loss of $302m (£150m), Mark Ernst, chief executive, said: "The loan originations market is in the midst of the most severe dislocation it has seen in years, maybe the most severe since the 1930s."
During early trading, the Dow Jones industrial average slipped by 104 points, taking it 750 below its record high set in mid-July. The Federal Reserve injected $10bn of liquidity into the banking system and by lunchtime in New York the blue-chip index had pared back its losses and was down only 16 at 13,272.
Freddie Mac, the US government-sponsored mortgage aggregator that buys loans and repackages them as securities to keep costs down for low-income households, revealed that it had taken a $320m hit on credit losses in the three months to June.
Standard & Poor's, the credit rating agency, predicted more pain in coming months for investment banks, which, it said, could see their banking and trading profits fall by as much as 70%. In a research note, S&P's credit analyst, Nick Hill, said revenue for Wall Street institutions could be down by as much as 47% - worse than the 31% drop in the second half of 1998, when the markets were hit by an economic collapse in Asia and a currency devaluation by Russia.
"There is a common theme between the two years," he said. "The source of the problem has shifted from emerging markets to the world's most developed economy."
An Australian hedge fund that has lost as much as 80% of its value during the month's market turbulence threw in the towel yesterday. Basis Capital declared bankruptcy for its A$100m (£40m) Yield Alpha Fund and applied to courts in London and New York for protection from creditors. Steve Akers, of liquidators Grant Thornton, said investments included forays into Britain and the US. "We believe there are assets in those two jurisdictions which need to be protected," he said.
The power of hedge funds in global markets was underlined by a study showing that they are responsible for 30% of all bond trading in the US - double their share a year ago. Greenwich Associates, the consultancy that carried out the research, said hedge funds are no longer an "important part" of the market for fixed-income products - they are the market.
Standard & Poor's Corbet Leaves Amid Subprime Fallout (bloomberg) Standard & Poor's President Kathleen Corbet resigned after lawmakers and investors criticized the credit rating company for failing to judge the risks of securities backed by subprime mortgages.
McGraw-Hill Cos., parent of Standard & Poor's, said in a statement today that Corbet will be replaced by Deven Sharma, executive vice president of investment services and global sales. Corbet is leaving to spend more time with her family and her exit isn't related to the current credit-market turmoil, McGraw-Hill spokesman Steven Weiss said in an interview.
S&P and Moody's Investors Service didn't downgrade bonds backed by loans to borrowers with poor credit until July, when some had already lost more than 50 cents on the dollar. McGraw- Hill shares have dropped 26 percent this year on concern that the rout in the credit markets may crimp new debt sales, and U.S. Senate Banking Committee Chairman Christopher Dodd said today he wants an explanation as to why AAA ratings were assigned ``to securities that never deserved them.''
``The business is at a critical juncture, a turning point,'' said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. in New York and co-author of a study that found ratings companies understated the risks of subprime mortgage bonds. ``Perhaps this is a sign of further personnel and business changes to come.''
McGraw-Hill shares rose 48 cents to $50.27 in New York Stock Exchange composite trading. Moody's Corp., parent of rating company Moody's Investors Service, fell 95 cents to $45.09 and is down 35 percent this year.
`Great Damage'
French President Nicolas Sarkozy this month called for a probe into ratings companies and EU Financial Services Commissioner Charlie McCreevy plans to review management, conflicts of interest and resources of the companies.
The firms did ``great damage,'' Dodd, a Connecticut Democrat seeking his party's presidential nomination, said today, adding he wants to examine the ``special status'' that allows credit rating companies more access than investors to information about public companies.
Credit-rating companies may also be successfully sued by investors who have lost money on subprime-mortgage securities and other similar bonds, according to a May study by Rosner and Joseph Mason, an associate finance professor at Drexel University in Philadelphia.
Fund Collapses
The slump in the value of mortgage-backed securities has threatened hedge funds that borrowed from international money markets to invest in the instruments.
Basis Capital Fund Management Ltd., the Australian investment company that hired Blackstone Group LP to sell assets, this week sought bankruptcy protection for its second-biggest hedge fund, which held high-yield corporate and structured credit securities, including mortgage-backed bonds and collateralized- debt obligations.
Bear Stearns Cos. Has also sought protection for two hedge funds, while DBS Group Holdings Ltd. said it had S$2.4 billion ($1.6 billion) at risk from collateralized debt obligations, raising a previous estimate because an investment vehicle it manages was forced to turn to the bank for funding.
Short Interest
Corbet left after three years on the job. Sharma, 51, joined S&P in 2002 and was most recently executive vice president for global strategy. He previously spent 14 years at consulting company Booz Allen Hamilton, where he was a partner. A graduate of the Birla Institute of Technology in India, Sharma has a master's degree from the University of Wisconsin and a doctoral degree in business management from Ohio State University.
``Deven Sharma is a very skilled executive with global experience and knowledge,'' McGraw-Hill's Weiss said. ``We remain very positive about the long-term trends that drive demand for S&P's credit ratings, index services, equity research and other data products.''
Still, short interest in shares of Moody's and McGraw-Hill has soared this year, a sign investors are betting their earnings will suffer.
Short interest in McGraw-Hill has tripled since February to about 6.1 million shares. The short interest on Moody's has increased about ninefold in the same period to 31 million shares, data compiled by Bloomberg show.
McGraw-Hill and Moody's have declined partly on concern that subprime mortgage defaults will slow demand for ratings of collateralized debt obligations.
Growth at S&P, McGraw-Hill's most profitable unit, will slow in the second half from the ``very, very hot'' first half, Chief Executive Officer Terry McGraw said July 24 on a conference call.
Fintag says This could be the end of the rating agencies as we know them.
My pet hate for most of 2007, they are dinosaurs who are no longer fit for purpose.
I still don't get how they could have got away with giving out AAA's to partially toxicated waste and been so slow to downgrade after funds completely blew up.
Just like the research departments after the dot com debacle, they are history.
TREASURIES-Tumble in Asia as Bush to propose subprime help (reuters) U.S. Treasuries tumbled in Asia on Friday as reports that President George W. Bush would announce reforms to help subprime mortgage borrowers stirred hopes the measures could relieve a credit market squeeze.
Fintag says This is not good. We have the Nanny central banks thinking they are doing us a favour (but making it worse - a 2 tier market never does) and now the US Government is looking to provide handouts.
The market situation was bad - now its even worse.
How do you feel as a tax payer? Having to bail out banks who pay large salaries to their employees and then having to pay out to people who were too greedy and stupid to care?
HAPPY DAYS
Why Hedge Funds Matter (financialarmegeddon) It is impossible to stay abreast of what is happening on Wall Street (and, ultimately, on Main Street) without knowing what hedge funds are up to.
Some might wonder why. After all, this group of lightly regulated money managers caters to the needs of wealthy investors and has little interaction with ordinary Americans.
That is anything but true. Hedge funds exert a tremendous influence on stock, bond, currency, commodity, and other markets, and they have been major players in virtually all aspects of modern finance, including mortgage lending.
Although there are many factors involved, two stand out: as a group, hedge funds have a substantial measure of assets under their control, and they are not afraid to aggressively deploy these funds in trading venues around the world.
In "Hedge Fund Assets Rise," Reuters gives us the latest data on the size of the industry.
Investors poured $41.1 billion (20.5 billion pounds) into hedge funds in the 2007 second quarter, which combined with performance gains, swelled industry assets to an estimated $1.67 trillion by the end of June, fund tracker Lipper TASS said on Tuesday.
The gains, which marked the second biggest quarterly inflow since 1994, came mostly before recent turmoil struck many hedge fund strategies due to market volatility due to the subprime lending market meltdown.
Still, the turmoil that escalated during the summer isn't having a significant impact on investors' resurgent appetite for hedge fund strategies, Lipper said.
"Today the big bulk of inflows are coming from institutional investors who have a longer-term horizon," said Ferenc Sanderson, senior hedge fund analyst for Lipper, a unit of Reuters Group. "The inflows may take a knock, but will still remain firm. There's no panic and running for the doors."
During previous periods of outflows, such as after the Long-Term Capital Management collapse in 1998, hedge fund investment was largely from high net worth investors, who tend to pull back quicker during market changes than institutions, said Sanderson.
The second quarter inflows, which were the second highest since the same period in 1994, came amid "relatively strong performance" for hedge funds of 5.19 percent by June 30, according to the Credit Suisse/Tremont Hedge Fund Index.
The aggregate hedge fund performance didn't exceed market indices for the period, however. The S&P 500, for instance, returned 6.28 percent, while the MSCI World TR returned 6.71 percent.
The biggest inflows, according to Lipper, were for long-short equity strategies, which gained $14.9 billion, followed by event-driven funds, which gained $12.2 billion. Multi-strategy funds gained $6.1 billion during the period.
Strategies that posted net outflows included global macro funds, which bet on world currencies and sovereign debt and were down by $848 million, and managed futures, which were down by 686.7 million, Lipper said.
In "Hedge Funds Do About 30% Of Bond Trading, Study Says," the Wall Street Journal reports on a survey that details the scale of their involvement in today's markets.
There was a time when debt was considered a boring investment, held primarily by institutions seeking predictable returns or a steady stream of interest payments. A recent study by the consulting firm Greenwich Associates shows how much that's changed.
Hedge funds have quickly become a dominant player in the world of debt. In some corners of the market -- often among the most complex areas -- they are the biggest force by far. Hedge funds are responsible for nearly 30% of all U.S. fixed-income trading, according to the survey.
That level, which reflected activity over a 12-month period through April, was double the amount of trading hedge funds accounted for the previous year. Greenwich found hedge-fund trading comprises 55% of U.S. activity in derivatives with investment-grade ratings, and also 55% of the trading volume for emerging-market bonds.
The rapid rise in hedge-fund trading underscores the changing nature of the debt markets. Unlike many mutual funds that look for stable returns or pensions and insurers that want steady, long-term holdings, hedge funds frequently seek short-term gains through numerous trades they can amplify with borrowed money.
"We've seen over the past 10 years a proliferation of products created to meet the needs of hedge funds," says Tim Sangston, a managing director at Greenwich Associates. "More and more of the growth in bond trading is coming from these kind of professional traders and investors."
In some corners of the U.S. debt market, hedge funds practically are the market. For instance, hedge funds generated more than 80% of the trading for derivatives with high-yield ratings, and more than 85% of volume in distressed debt, Greenwich found.
Hedge funds also accounted for a good portion of the trading in mortgage-backed securities, asset-backed securities, collateralized debt obligations and other parts of the debt market that have suffered recently as worries over subprime loans have spread.
Analysts say these debt instruments were developed primarily for sophisticated investors like hedge funds, which sometimes use these products to protect themselves. But the debt securities have also been peddled to pension funds and other institutions that may not completely understand them.
The survey involved responses from 1,333 institutions in North America, including mutual funds, insurance companies, pension funds, banks, brokerage firms' proprietary trading desks and federal agencies, Greenwich said. These investors were polled about their trading in 15 kinds of debt instruments. Overall, debt-market trading volume among the participants increased by 10% in the period, to $25 trillion, from the previous year.
Fintag says Thanks for this. As usual, my favourite gloomy website has once more been the rational voice of reason.
Recession fears as more hedge funds crumble (abc) An influential global economist has warned the widening financial crisis could plunge the world into recession, as an Australian company becomes the latest victim of the market turmoil.
The Sydney-based hedge fund Basis Yield Alpha, run by entrepreneurs Stephen Howell and Stuart Fowler, has filed a petition for bankruptcy protection in New York.
Its parent company Basis Capital has asked the US courts to bar legal action against the fund while it liquidates assets - news that is likely to send a chill through financial markets.
The suit, filed overnight in the US Bankruptcy Court, is essentially a plea that investors and creditors not be in a position to sue Basis Yield Alpha whilst it winds up and liquidates assets held in the Cayman Islands.
The hedge fund's fate demonstrates the six degrees of separation that now exists in financial markets.
Debts from dodgy US home lending are spinning throughout the globe, through the process of securitisation.
Basis Yield Alpha had invested in a product known as a collateralised debt obligation (CDO), which exposed the fund to high levels of risk in the US subprime mortgage market.
When mortgagees started defaulting on their loans, Basis Yield Alpha was hit hard.
Another fund, Lehman, has been selling these CDOs to Australian local councils.
So while the US mortgage debt is not on the balance sheets of major banks in the US, as it might have been some years ago, it has instead been spread all around the globe.
World recession
Standard and Poor's chief economist David Wyss says defaults in the US could spread beyond risky lenders to traditional American banks.
Speaking to The World Today, Mr Wyss said the worst of the subprime mortgage crisis may still come.
"This isn't over yet. What we're seeing so far is largely the start of the problem," he said.
"We've seen most of the drop in housing starts and home sales. The price decline though is only about half over, and we haven't really seen any of the losses yet.
"The losses are a lagging indicator and they probably won't peak until early 2009."
He says he is expecting defaults to continue to increase.
"The real problems are the mortgages that were written right at the peak of the housing cycle, back in late 2005 and 2006," he said.
"We're just starting to see those delinquencies build up right now. But what has the markets spooked, is not what's happened yet - it's projecting this trend.
"I still think the Federal Reserve has the tools to make sure that this doesn't turn into a recession.
"I think that the rest of the economy is still quite buoyant, but there's obviously now a higher risk that this could turn into an outright recession."
While Mr Wyss believes the housing correction is mild by historical standards, he says it may just be enough to push the US to the brink of recession.
"If the US gets pushed into recession, it won't just be because of the housing situation itself, it will be because the spread of that into the rest of the financial markets," he said.
"People are getting scared of holding securities and if they get nervous about debt, if they get nervous about taking risks, that can hit investment, and that can hit the rest of the economy."
Fintag says If we go down, the rest of the world will follow.
That means no jobs, no demand, the rich being taxed hard, rioting on the streets and lots of romantic Hollywood films and a return to Charlie Chaplin style humor.
CODE FOR THEY ARE SCREWED
Barclays reassures after more borrowing (ft) Barclays rushed to reassure investors and depositors on Thursday night after it was forced by what it said was a technical glitch to borrow from the Bank of England's emergency reserves for the second time in just over a week.
The UK bank issued a statement after it emerged it had borrowed £1.6bn (€2.4bn) from the central bank's emergency facility on Wednesday evening. The facility, which carries a penalty rate of interest, has become the subject of intense scrutiny by investors as they search for signs of distress as a result of the recent turmoil in the capital markets.
Barclays was forced to use the facility after a technical breakdown in the system used to clear and settle money-market transactions left it unable to borrow in the inter-bank market to cover a short position in its accounts with the Bank of England.
But the episode is embarrassing for Barclays, which was last week drawn into a dispute with HSBC, its UK rival, after borrowing £314m from the central bank's emergency facility.
However, Barclays stressed it was not facing any financial difficulties: “Had there not been a technical breakdown, this situation would not have occurred,” Barclays said. It added: “There are no liquidity issues in the UK markets. Barclays itself is flush with liquidity. In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers.”
The news came as investors were looking for signs that banks may have suffered losses as a result of the upheaval in the credit markets. This week, Barclays moved to ease concerns about its exposure to troubled debt vehicles created by its investment bank. On Thursday, it insisted it had not put any pressure on Edward Cahill, a senior director in credit derivatives who quit suddenly last week, to resign and that it had met him this week to ensure an orderly transition of responsibilities.
Also on Thursday night, Standard & Poor's, the rating agency, reaffirmed Barclays' credit ratings after concluding that the bank's exposure to potential losses as a result of the US subprime mortgage meltdown was limited.
Technological problems arose on Wednesday when the link between Crest, the UK settlements house, and the Bank's electronic settlements system broke down for an hour, potentially interfering with banks' deals. Crest said it had extended the deadline for settlements by an hour in order to clear any backlog, and had not received any complaints from banks.
However, the effects of the technical breakdown were evident from reserves other banks hold with the Bank of England, which on Wednesday were £1.647bn higher than it had forecast for the day.
The Bank of England last night declined to comment. However, it is understood that regulators are not concerned about any liquidity issues involving UK banks.
Earlier in the day, news that the Bank had lent £1.556bn overnight reignited fears that UK banks were facing severe liquidity difficulties and sent sterling and money markets sharply lower. The overnight rate in the interbank market spiked higher to 6.13 per cent, almost 0.4 percentage points higher than the Bank's official 5.75 per cent rate. The pound initially fell 0.5 per cent to $2.0046 against the dollar before recovering ground to close slightly up in London at $2.0160.
Fintag says With so much inter-bank lending, there must be a lot of tit for tat fighting going on.
"Oh, I think the Swift code you gave us was wrong"
"Looks like we TT'd the monies to the wrong account"
"Sorry, but our systems are down - do you want a cheque instead?"
"Our credit committee has some reservations. Sorry, but their lines are engaged"
[UPDATE: It's a shame that Barclays couldn't come clean and just say they needed it to bail out a hedge fund that they have written highly leveraged structured products on - Cairn Capital - that if collapsed would cause serious problems for Bob Diamond.
Bobby Dazzler must be having kittens watching his beloved Barcap collapse around him ...
Banks set to cut 10-15% of staff (ft) Investment banks are set to cut 10-15 per cent of their staff across the board as turmoil in the markets takes its toll on revenues.
The bulk of cuts are expected in structured credit and leveraged finance, though recruitment experts said other investment banking areas could be affected.
Russ Gerson, chief executive of the Gerson Group, a Wall Street executive search firm, said: “Unlike previous cycles, all the financial institutions are inter-related because of the credit market, so there will be a major fall in activity across all areas, with the inevitable job cuts.”
Earlier this week, Royal Bank of Scotland said it was scaling back its collateralised debt obligations team in response to the credit crisis, while Barclays Capital and HSBC have lost their heads of structured finance.
On Thursday, it emerged that Deutsche Bank was shutting one of its credit proprietary trading desks in London, following reports that it had lost about €100m ($136m) in volatile credit markets.
People close to the bank said the closure would affect about a dozen people, some of whom would leave the bank. Deutsche Bank declined to comment.
The job cuts come after an aggressive period of hiring across capital markets divisions last year to meet demand from hedge funds, financial institutions and asset managers.
The Centre for Economic and Business Research, an economics consultancy, said there was a record number of jobs in the City of London at the end of 2006.
Jonathan Said, senior economist at the CEBR, said that of the 10,000 jobs added last year, at least half would now have to go. However, with liquidity still coming in from China and other emerging markets, banks will try and cut bonuses before people.
Standard & Poor's this week said the combined profits of the five biggest investment banks fall as much as 70 per cent in the second half from the first half.
Last year, top-performing credit traders earned year-end bonuses of $2m-$3m (£1m-£1.5m), while global heads of credit derivatives took home more than $4.5m, according to Armstrong International, a European executive search firm.
Recruitment experts are now forecasting bonuses will fall 10-15 per cent this year. Structured credit bankers are likely to suffer the most, with some industry consultants expecting a reduction of as much as 25 per cent in compensation packages.
The headcount reduction is unlikely to reach the scale it did in 2000, when investment banks cut tens of thousands of jobs following the collapse of technology and telecoms stocks.
“The difference this time is that the fundamental economy is better than when the dotcom boom exploded which should help reduce the pain for many of the banks,” Mr Gerson said.
Fintag says Having spoken to a number of recruitment agents, it looks like these stories are true. A number of banks have hiring freezes - including DB, Goldman and Lehman - and the boards are looking to get the stock prices up quickly because their bonuses are based on stock and options.
Time to forget that Aston Martin you always wanted.
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My blackberrys have worked well for the past 5 years. The device is smaller and better than ever and synchs well with Microsoft Outlook and allows me to write this newsletter when on the road. My IT geeks love it, my security people love it and so do all my mates.
But Microsoft are threatening to ruin the party. This is the worst news I have heard all year.
If only Apple would counter bid ... I like things to be simple and Microsoft have this way of making things very complicated that fall over too. There motto should be
"When one click will suffice, make it five instead - with a random chance that it will not work when you have clicked."