28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
This line is taken from a quote reported yesterday by a BT spokesman following the firing of ten thousand workers. Like this news letter, less should be more and more can mean less. Yesterday I wrote an interesting monologue but it was too long, full of errors and quite frankly cheap, unprofessional and could have been written by a lesser mortal than I. It should have been less, for less is more.
So today less is more and, more or less, less has become more. So no more messing, here is less.
Having looked, more or less, at the lack of analysis and planning the world is undertaking, I have some questions that must be important because as far as I can tell only questions of the moment ever matter.
Why is Hank Paulson still in his job?
When will the world start becoming alarmed at America's aggressive protectionist stance?
If rates in the UK and USA fall to zero, what will GBP / USD be?
If the TARP (Taking over Anyone's Reckless Positions) turns into a distressed fund, will the SEC oversee and regulate it?
Can the TARP buy unwanted new auctions of T-Bills?
What happens if the capital markets fail to take up government debt? Does this mean the USA becomes the next Zimbabwe?
If a bank is state owned and it buys newly auctioned government debt, isn't it really buying back its own debt with proceeds from its own debt issue?
Will the TARP have an end of year AGM that 250 million taxpayers can attend?
Will the TARP offer managed accounts? Is it UCITs compliant? Does it adhere to the Hedge Fund Standards Board guiding principles of best governance?
On my quest for diversification, I asked for a small business loan from HBOS and they said no; I own this bank as a shareholder and a taxpayer. Should I write to Gordon Brown and complain?
My next door neighbour hasn't paid their mortgage off for the last 4 months. The mortgage is with Northern Rock. As a taxpayer and indirect owner of NR, can I repossess his house?
By 2050, 90% of people will be obese. As a minority will I get reduced ticket prices on planes and buses?
Degrees: in the 70s it was Sociology; 80s it was Computer Studies; 90s it was Media Studies; 00s is was Business Studies. For the 10s, will it be Self Sufficiency?
If hedge funds are collapsing why are my rents in Curzon Street going up?
If the financial services industry is in decline, will the FSA see a serious drop in income and have to fire its own staff?
Why does the UK have two bodies called the FSA? People often think I am regulated by the Food Standards Agency.
Is it true the SEC only has 5 employees?
Why does Mervyn King not admit full scale depression next year?
Barclays are moving out of the UK so no more tax revenue. Why isn't the UK government stopping them?
Was this less too more or was the more less and less more?
The Big Gig Today I will be at the 02 arena with thousands of other Lehman's creditors (including many hedge funds, Martines MeatingPlace (Amsterdam) and British Telecom amongst others).
I hope I don't see you there, but if I do and you want to buy me a Starbucks, please don't.
Sitting on cash I have been accused of flippancy, cynicism and down right lying. Today we look at the things I and my co-workers (that's what they think) look at and discuss at great length - in hoping to answer the question, what happens next for the UK? So please look at the charts and make your own mind up.
Online estate agent says latest figures underestimate fall in prices by two-thirds
House prices across the UK have already fallen far further than official data and market indicators suggest, Rightmove, the online estate agent warned yesterday, as it revealed that up to 300 estate agents were quitting its service every month.
While the latest figures from leading mortgage lenders such as Halifax suggest that prices are down by 15 per cent from their peak, Rightmove said the falls were up to two-thirds higher.
Miles Shipside, the commercial director of Rightmove, said: "Estate agents tell us that the actual prices that are being achieved [initially between buyers and sellers] for property are down by about 20 to 25 per cent beneath peak asking prices. That has not come out in the national indices."
Fintag says You know my views on people buying property. Here is another reason for concern - the UK doesn't do very much except churn out a few good actors, run some excellent charities and lose at all the sports it invented. So when we look at the total wealth of the UK and learn over 60% is due to the stock of real estate, then the smoke and mirrors suddenly come into view.
STERLING FALLS HAVE COST EXPAT PENSIONERS BILLIONS
Expatriate pensioners in Europe have seen their average monthly pension income plummet by almost €200 a month thanks to falls in the value of sterling, a collective loss of more than €4 billion of their income in the last two years.
The shocking reduction, calculated by currency specialists HiFX, could get even worse if the pound continues to fall.
If it hit €1.15, their pension income could fall by a further €750 over the next year, and with interest rates cut a full 1.5 per cent by the MPC last week, there is likely to be even greater pressure on sterling.
Nick Fullerton, managing director of currency broker FC Exchange, said: "This interest rate cut will bring more doom and gloom to an already weak pound - but the longer people put off their currency transactions, the more expensive it will become.
Fintag says A trashed currency gives you imported inflation but helps us USD denominated hedge funds so yes there are winners and losers. The big loser is of course the UK as the rest of the world treat you differently. Like a leper.
Here are the reasons GBP is looking very sorry for itself:
independent says " Pound sinks to record low against the euro "
HEDGE FUND CHIEFS BLAME THE SYSTEM FOR FINANCIAL CRISIS
Some of the world's top-earning hedge fund managers told Congress on Thursday that they broadly agreed that largely unregulated financial vehicles ought to be subject to greater disclosure, though they warned of excessive regulation.
The statements by George Soros and others suggested that hedge fund executives and lawmakers were reaching a consensus in the wake of the credit crisis that the status quo, in which the funds largely escape scrutiny, was no longer tenable.
“We have moved out of the mode of 'to be or not to be',” said Democrat Eleanor Holmes Norton on the inevitability of new regulations.
Fintag says Absolutely. We just follow the rules, live in the existing framework and get on with making our investors rich (pension funds, endowments, charities et al). Well that was the plan. Now we can blame ourselves for not noticing the system was broken and trying to trade as if it was still normal.
GLG Partners, a UK hedge fund manager with a New York listing, has told its employees to expect redundancies after its assets under management dropped by a third and most of its funds registered losses.
The firm, which employed 350 staff at the beginning of this year, according to its year-end filings with the Securities and Exchange Commission, told staff last week they should expect job cuts, according to a source close to the company.
Fintag says Does this include Manny Roman? Appears not. I will say hello to those who are still employed at the 02 stadium this morning.
GEORGE SOROS WARNS 'HEDGE FUNDS WILL BE DECIMATED'
Hedge funds will be decimated by the global financial meltdown and the crisis will wipe out as much as three quarters of the money they manage, George Soros, the billionaire investor, predicted in Washington yesterday.
His comments were made as he fielded hostile accusations in the US House of Representatives that hedge fund managers had enjoyed “unimaginable success” even though they were “virtually unregulated”.
Fintag says Yes master. I think he is saying this to deflect attention away from the Hedge Fund industry. Smart guy ...
new york times says " Hedge Fund Managers Ask for a Few New Rules "
STANDARD & POOR'S SAYS ACTIVE FUND MANAGERS - - BOTH US AND INTERNATIONAL - - UNDERPERFORM BENCHMARKS OVER LONG PERIODS OF TIME
Standard & Poor's Index Services reintroduced an enhanced version of its widely followed Standard & Poor's Indices Versus Active Funds Scorecard (SPIVA). The improved SPIVA Scorecard now offers broader asset class coverage and mutual fund data derived from CRSP Survivor-Bias-Free U.S. Mutual Fund Database. SPIVA reports performance comparisons corrected for survivorship bias, shows equal- and asset-weighted peer averages, and provides measures of style consistency covering actively managed U.S. equity, international equity and fixed income mutual funds.
"Over a five year horizon, our research shows a majority of active managers underperform indices. This is true even in relatively inefficient segments of the market such as small capitalization stocks and emerging markets," says Srikant Dash, Head of Global Research & Design at Standard & Poor's Index Services.
Fintag says Shocking stuff. Why do these asset managers actually bother turning up to work? They might as well just buy an index tracker.
GOTTEX ANNOUNCES TEMPORARY SUSPENSION OF REDEMPTIONS IN SOME FUNDS
Global alternative asset management group Gottex Fund Management has temporarily suspended redemptions of itscommingled Gottex market neutral and Gottex directional funds. The temporary suspensions are driven by market illiquidity, credit tightening and adverse foreign currency movements affecting underlying funds in which Gottex funds are invested. The suspensions also reflect conditions prevailing across the hedge fund industry, said the company in a statement.
"In the past few months liquidity has dried up considerably, reflecting a large reduction in available liquidity that has impacted companies of all sizes across many global industries. Although we believe this situation has created more attractive opportunities for managers of underlying funds than at any time since our funds launched in 1999, it has resulted in an increasing number of hedge funds opting to restrict redemptions in order to protect remaining investors and to provide their managers time to raise cash and sell positions with the expectation that markets will begin to normalize and liquidity will return," said the company statement.
US President George W Bush has admitted the financial system needs reforming, but insists the credit crunch was not a failure of the free-market system.
Speaking in New York, Mr Bush said that while financial markets did need some new regulation and more transparency, free trade should not be restricted.
Fintag says This is about the best speech Bush has ever done. I hope Obama takes heed.
Daniel Zwirn, a once-highflying hedge-fund manager whose fund imploded back in February, has been dipping into his own pocket over the past several months to keep the lights on at his firm D.B. Zwirn & Co.
According to sources, Zwirn has been writing checks totaling as much as $50 million to cover the costs of staying in the Midtown office he leases at 745 Fifth Avenue, as well as to pay vendors and employees as he unwinds his $5 billion hedge fund.
Fintag says Such a nice man. You don't get the Dick Fuld's of this world doing this? Hedge Funds - soft cuddly and responsible: Investment Banks - hard, greedy and selfish.
The Wall Street Journal reports that Raoul Weil, a member of UBS's executive board, has been charged by US prosecutors with helping US clients evade federal income taxes. The charges come after a probe into allegations that the bank was responsible for helping some of its wealthy clients avoiding tax payments on some $20bn in assets.
Through his lawyers, Weil has denied wrongdoing. The charges have been called 'toally unjustified and without any factual basis'.
Fintag says This is very frightening for all those Swissies who thought hiding in Zurich meant they were safe and sound.
Goldman Sachs suspended its rating on General Motors Corp on Thursday and said the automaker needs at least $22 billion in federal aid, while Chrysler said it would be "very difficult to survive" without government support.
But U.S. lawmakers remained deeply split over whether to bail out the U.S. auto industry, and U.S. Treasury Secretary Henry Paulson said any federal aid for the U.S. automakers must ensure their long-term viability.
Fintag says Given the TARP is now a distressed hedge fund, and it doesn't appear to be buying toxic bad debt because as soon as it does the markets are set a very low price so nobody wants to sell (equity please - bad debts exchange no) just like the M-LEC (remember that?), then yes they should use it to prop up every tom dick and harry.
As most of us know, people have this habit of underestimating the cost of things. Sometimes it's because they don't want to own up to the truth, out of fear, insecurity or ignorance. Or their minds downplay the negatives and emphasize the positives -- whether intentionally or not. Whatever the reasons, it is not uncommon for intial forecasts to be an order of magnitude removed from the final tally. Given that, is it any surprise that government "rescue" efforts that were kicked-started with a $150 billion fiscal stimulus plan now add up, as Forbes notes, to "Washington's $5 Trillion Tab"?
Fintag says Only USD5 trillion ... staggering. This is like no other crisis.
yahoo says " October budget deficit hits record of $237.2B "
reuters says " Foreclosures up 25 percent: RealtyTrac "
The German economy, Europe's largest, contracted more than economists expected in the third quarter, pushing the nation into the worst recession in at least 12 years.
Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell 0.4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters -- the technical definition of a recession -- in 1996.
Fintag says Wait for it ...the next headline will be "hedge funds to blame". I better change my job title on my passport as I am due to visit Munich next week.
America's largest public pension fund, known as Calpers, is paying dearly for its ill-fated decision to become one of the most aggressive real-estate investors among public pensions.
Amid the rapid decline in the housing market, the value of Calpers's investments in land and housing projects across the country had fallen 35%, to about $6bn (€4.8bn), as of June 30, according to recent performance results released Wednesday by the California Public Employees' Retirement System
Fintag says I think all Real Estate should be outlawed as an asset class that pension funds can invest in. Seriously, it has caused no end of problems. It always does.
Jamie Dimon, chairman and chief executive of JP Morgan Chase, said the bank spent $10bn (€8bn) more than anticipated in de-risking Bear Stearns' balance sheet but the integration is almost complete as he pledged to expand the investment banking business.
Dimon said at the Merrill Lynch Financial Services Conference that Bear Stearns was still expected to add $1bn to JP Morgan Chase's annual earnings by the end of next year.
Fintag says Now that is a shame. But hey, JP Morgan bought Bear for pennies, got a Prime Brokerage business, distribution and some decent staff. And to top it a free loan from the Fed.
The Fortress Investment Group, one of a handful of publicly traded hedge and private equity firms, reported a wider-than-expected quarterly loss on Thursday as heavy redemptions hurt returns.
The company, which began trading on the New York Stock Exchange in February 2007, reported a third-quarter loss of $57 million, or 66 cents a share. In the same period a year ago, Fortress posted a loss of $38 million, or 52 cents a share, including a charge of $54 million related to payouts made as part of its initial public offering.
Revenue fell 25 percent, to $185.1 million from $247.3 million.
Fintag says Bloody accountants.
U.S. HEDGE FUNDS ANXIOUS AS REDEMPTION DEADLINE LOOMS
Anxiety is sweeping the hedge fund industry before a crucial deadline on Saturday, when investors angered by recent heavy losses are expected to demand the return of billions of dollars.
"Managers have a pretty good feeling for what is coming, and there are significant redemption requests out there," said Stewart Massey, founding partner of Massey, Quick & Co., an investment consultant that puts money into hedge funds.
Fintag says Yes, this is true. Whereas I used to enjoy signing off the subscription forms, checking the money laundering checks had been completed and looking forward to some decent lunches with investors, now it is fighting off aggrieved investors wanting their money back.
I mean, who do these people think they are?
bloomberg says " Fortress Hedge-Fund Investors Ask to Pull 25% of Cash "
Royal Bank of Scotland (RBS) is to cut about 3,000 jobs in the next few weeks, the BBC has learned.
The positions will go in its global banking and markets workforce, spanning more than 50 countries, but is likely to include City of London posts.
It is understood the bank's High Street operations, and those of subsidiary NatWest will be unaffected.
Fintag says Why do banks always fire people at Christmas? So heartless. Of course this year the leakage has been going on every month but one senses this is the season for firing; burying bad news in bad news.
Postscript Someone emailed me accusing me of being bald, short and overweight. Come and see me at the 02 and be surprised at how wrong you are. Thanks to an expensive personal trainer (Matt Roberts), an excellent Harley Street hair specialist and genes inherited from my blue blooded ancestors, prepare to be shocked. [Editor: You forget to mention your bad odor and acne]
Here is me lining up with the Lehman's Creditors today:
27 comments
Jamoncookies said ...
Fin, I share with you the concern about the UK going to the dogs, your cynisism about the current state of affair and your pessimism about things to come.
What puzzles me is your constant need to assert you are good looking, tall...
What next, a description of your penis?
Think about it or get somebody to do it for you and tell you what the problem is.
best
14 Nov 08 - 07:31 gmt
Finbar said ...
I have a fragile ego ...
14 Nov 08 - 07:52 gmt
anonymous said ...
I did notice on the Yahoo video that you were going a bit grey....
14 Nov 08 - 08:00 gmt
LittleBrittain said ...
Latest news, France posted positive growth of 0.14% last quarter!!!
How convenient, France is therefore not in recession as technically defined
the masters of spin at work, look look into my eyes, there is no recession, there is no recession, 1,2, 3 wake up, you're back
now turnaround and lower your pants
look into my eyes look into my eyes
14 Nov 08 - 08:08 gmt
anonymous said ...
Britain has one T you cretin
14 Nov 08 - 08:16 gmt
Top Cat said ...
Who saw the RAB Capital announcement? What's going on there? Their market cap is way below the cash on their balance sheet.
14 Nov 08 - 08:20 gmt
M said ...
Hei! I'm an accountant. Be nice...
14 Nov 08 - 08:39 gmt
M said ...
Much much better than yesterday, my favourite questions no 7 and 8 but they kept getting better until the end. more or less .lol. i would never have said anything about anything, but the opening paragraph sums it up pretty good. lol
14 Nov 08 - 08:42 gmt
anonymous said ...
RAB AUM was $7bn at end of 07, now set to fall to $2bn at end 08
14 Nov 08 - 08:56 gmt
Little Britttain said ...
who cares how many Ts Britttain has, it's gone, sinking, disappearing, melting, submerged, eaten, not yet digested
14 Nov 08 - 09:20 gmt
anonymous said ...
the way these young-uns talk it's as if UK has never had a recession...remember 10+% unemployment, 3 day weeks, power shortages, 15% interest rates...it's going to be rough but let's have some perspective
14 Nov 08 - 09:22 gmt
Shane Warne said ...
Blue-blooded ancestors? Careful Fin, you're saying you are both inbred and German with that one!
14 Nov 08 - 10:00 gmt
Finbar said ...
Lehman meeting delayed ...I am still lining up. Lots of people ready for a fight. Feels like I am outside a northern rock branch. To make this easier I will be twittering
14 Nov 08 - 10:54 gmt
Panta said ...
Hey it seems that we can get our 75 € for CONTI...Happy Xmas :)...Its not over till is over...
14 Nov 08 - 11:25 gmt
cockyspiv said ...
Ive never been to the O2 before, anyone else here?
14 Nov 08 - 12:38 gmt
cockyspiv said ...
LB - as they say if Typhoo put the T in Britain, who put the Tree in Country ?
14 Nov 08 - 12:39 gmt
GP said ...
fin, many thanks for getting back into your writing... My useless supper party conversation is now back to form. many thanks
14 Nov 08 - 12:45 gmt
anonymous said ...
Fin German - never with his soh - I can say so, I was borne there...
14 Nov 08 - 14:55 gmt
KONG said ...
Has anyone heard of the Anastasi Fund? I was hoping to get in touch
14 Nov 08 - 15:54 gmt
Finbar said ...
Yes, i am done with lawyers and aggrieved creditors. Good to see GLG are on the creditor comm. Should speed things up
14 Nov 08 - 15:56 gmt
Moron said ...
it seems to me that the rally is not rallying anymore:))))....down in a straight line for the rest of the year....
14 Nov 08 - 16:01 gmt
KONG said ...
Where did you see that Fin? Who else is on the committee?
I found the meeting today a little dry and uneventful.
14 Nov 08 - 17:10 gmt
KONG said ...
I liked all the specific questions raised by the French Funds. Like PWC were going to answer then and there.
One of the Linklaters panel was the spit for Jerry Paxman.
14 Nov 08 - 17:16 gmt
Finbar said ...
Kong - if you were there you would have seen the lse and bluebay too. Last slide of the day.
14 Nov 08 - 17:28 gmt
KONG said ...
Fin- I saw the nominations- voted for the MFA candiate, Ramius- but shot for the door as soon as things were done. I thought your comment on GLG meant you knew the result of the vote.
14 Nov 08 - 17:31 gmt
KONG said ...
I was interested by the Question from Donald Stewart of Anastasi- which is why I was asking if anyone had a contact.
14 Nov 08 - 17:32 gmt
Finbar said ...
Sorry, result not known but I guess Manny R will get the vote - he is the only name anyone has heard of. I thought all the questions were a bit left field (answer - it depends what your contract says) ...i was waiting for "and about my guaranteed bonus"
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