THE FINTAG NEWSLETTER
@ Mon 24 November 2008 : GMT

FINTAG COMMENT

Bad Parenting.

As the credit crunch morphed into a game of blame, our socialist leaning nanny governments have seen the boundaries of their responsibility move from laissez faire, with the odd detention for bad behavior, to full blown naughty step beatings and confusing messages. Telling a child off but not following up with any form of punishment is the cardinal sin of being a bad parent. Parallel this to governments who have allowed electorates to borrow now and then work out how to pay it off later, whilst doing exactly the same, there is now a divergence in what to do next.

Where as families are tightening their belts, vacationing at home and hanging onto their jobs and future security, their surrogate parents are doing the opposite. Nanny is borrowing more, spending more and then taxing the children. Huge poverty traps are being built as the poor who traditionally spend instead of saving are given huge hand outs and the wealth creators are punished with future tax rises.

The upshot is families will revolt. The black economy will be the new black as we all become equal. Except some will be more equal - the civil servants with jobs for life, index linked pensions and the new haves of a new world of confused children who are being given no guidance or leadership.

The revolt will take the form of an increase in racism, crime and hate. This may seem extreme but history does repeat itself. I can hear the "but this time it is different" and we are more educated and sophisticated. If only that were true. Times ahead are going to be grim unless Obama, the new world leader, can with his advisors break the back of this fastest ever falling bear market in history and provide leadership. Instead he will provide dollars which is fine because the way things stand it is the only currency you want right now.

At the weekend I had dinner with a well known Management Consultant who told me al the CEO's and boards are in absolute panic. Planning is no more on the agenda - now it is knee jerk mass cost cutting and firings and crossing of fingers. The life of many boards of directors will be shorter and shorter and companies will become more inefficient.

Great times of course for trading you might think? Well it is a bit like being on a roller coaster. We have gone down some of the scariest drops, but it is getting dark and we are unsure when the ride ends. That is why most of us are sitting on cash and hibernating for a few months planning on how to move our business offshore.

The UK government has decided to increase income tax. This is a bad move because in this global economy the wealth creators will move and the UK will be one big public sector, lumbering around like a bureaucratic monster trying to devour any wealth creation as it feeds its insatiable hunger for revenue to pay for the life styles of retiring mandarins and pen pushers.

Someone told me 350,000 jobs have been lost in the UK. But in the public sector, they have employed 50,000 more. Nice.

I am currently waiting to board a BA flight to New York. 6 months ago the flight cost GBP5,500. Today it costs just over GBP1,000. This sort of deflation is quite extreme but of course when I arrive in the land of depression, my weak GBP will buy very little. So I am bringing some juggling balls to busk for some dollars. I have worked out that a couple of hours will buy me a 5 bedroom house in Camden Town.

So who is a naughty school boy then?

SOAK THE RICH AND THEY LEAVE

telegraphFintag says
Thanks for the notice Mr Darling. My plans are being made. The likes of Dubia, Switzerland, Jersey and even Ireland must be rubbing their hands with glee. Countries need welath creators and the UK has decided it doesn't. Bye bye Britain. I will come back when order is resumed; although given the debt levels I may well be dead.

telegraph says " Pre-Budget report: Supertax planned for top earners "

CITIGROUP: A DECADE OF BOOM AND BUST

financial newsFintag says
And all because they forget they were just a savings and loans institution. Still, at least the TARP can release some of its capacity.

times says " Citigroup secures $20bn rescue deal "

OBAMA PLANNING ECONOMIC STIMULUS WORTH MORE THAN $500 BILLION; PLANS TO ANNOUNCE HIS ECONOMIC TEAM TODAY

fin factsFintag says
These numbers are thrown around with no reference to who pays for it and when it will be paid off? Japan tried this and have a 90% debt / gdp ratio. The Chinese must be laughing all the way to their paddy fields.

AND YOU THOUGHT 1931 WAS BAD

ritholtzFintag says
When you set up a blog, you should think carefully about its name. Big Picture has decided to migrate to another blog site and it is very confusing. Will the readers come too? I hope so. It is one of the best out there and the viewing figures prove it too.

GOVERNMENT DEBT TO RISE TO HIGHEST LEVEL SINCE WAR

independentFintag says
War Bonds eh? The UK paid the last of its World War 2 debts off 2 years ago. I wonder when the Brown Bonds are going to be paid off? The UK should join the Euro immediately. At least then the UK can be reckless with the rest of the Euro debt lovers. GBP is dangling on the edge of a cliff.

RECESSION'S GRIP FORCES U.S. TO FLOOD WORLD WITH MORE DOLLARS

bloombergFintag says
Does that mean when I land at JFK (did you know he died on the same day as Aldous Huxley? [Editor: And?]) I can swap my fingerprints and iris scan for a suitcase of dollars? If that is the case I will come back home again.

The UK is going to end up like Cuba or Russia where we trade in dollars instead of our local currency -USD will become the world's currency after all.

THREE HEDGE FUNDS ELECTED TO LEHMAN CREDITORS COMMITTEE

finalternativesFintag says
I thought about it but thought I would cause too much trouble. Good to see these people at the table because PWC haven't a clue what they are doing. Having sat for 3 hours in an airless conference room at the O2, it is clear they need guidance and hedge funds need their assets back urgently.

BARCLAYS CUTS STAFF AT NEW YORK PRIME BROKERAGE

finalternativesFintag says
There you go. There are so many industries that support hedge funds; hopefully politicians will take note. Hedge Funds are the saviours of the Financial Services industry.

Not only is there no bail out fund, but there are no tax breaks either... what is wrong with these politicians?

HEDGE FUNDS SLASH LEVERAGE

ftalphavilleFintag says
There you go again. Hedge funds are being prudent whilst governments borrow more. Leveraged countries eh? So when will S&P or Fitch be giving the UK junk bond status?

UBS OVERVALUED PROPERTY BY $100 MILLION, FIRED EXECUTIVE SAYS

bloombergFintag says
Is that all? Surely some mistake ...

ESCALATING BANK LAYOFFS STILL FAR FROM OVER

finance asiaFintag says
Intelligent Cost cutting is the new black and laying people off is easier if everyone else is doing it. The banks held on for as long as possible because they know it can take 10 years to get back up to an efficient level and critical mass. The later 1990's is a classic example of banks firing and then struggling to re-hire. This time the damage will be much worse.

Thankfully us hedge funds are the new banks and will scoop up the best people.

Announcement
My flight has been called so I am off. ...