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
So more people have been inflicted with Madoff disease and many are European. The mad man is on bail and no doubt wondering if his alleged fraud is a conspiracy to deflect the electorate from the real economic woes that we all face. Maybe Madoff was just a normal guy who just lost the plot and the crimes are not as bad as they seem. In George Orwell's 1984, there was always a hate figure and Madoff is now the fall guy. If only. I worked out yesterday that the trail fees, rebates and management fees on peddling his funds must be worth hundreds of millions if not billions. So many people were leaching off his failings.
Imagine you invested in a Tremont fund. Would you be part of the fraud? Would you indirectly be part of a money laundering scheme? For let's face Madoff was a money launderer. Would your uplift on redemption be aiding and abetting a crime?
Shocking stuff. Not as shocking as a reader who admitted to shop lifting a copy of my crappy book from Waterstones. Thankfully he wasn't a Goldman Sacher although I did get an email from one who left his fleet street office but had to turn back because he couldn't cope with the sunlight. When he got back there was a miserly severance package and a nice letter thanking him for giving his life and soul to the Goldman machine. Alas Goldman is no longer the Rolls Royce of banking - it is but a Trabant.
Last night I went to Carol Concert where irreligious ex investment bankers were turning to the Lord for help. Depression and suicide are on the increase and today's thoughts go out to the families inflicted by these conditions. It was only a year ago that the world was full of fun and heaps of debt taken out on rising assets.
Of course the familiar carols were sung and my dulcet tones resonated around the church. It was a pleasant way of releasing tensions and putting thoughts towards 2009.
That made me feel even more depressed for 2009 will be a year of cleansing, correction and hitting the ground hard. Instead I put my thoughts to coming up with more excuses in my year end newsletter to investors and wondering what life would really be like as a monk.
The news today is indeed brown with lashings of white robe. The USD and GBP are the whipping currencies and Woolworth's fire 27,000 redundant staff in the UK.
But enough of this maudlin. Time to get on on that bike and enjoy some exercise.
BERNARD MADOFF `FRAUD': MAN GROUP INVESTIGATES FUNDS
In anticipation many funds are expected to run internal reviews of their procedures which failed to detect the flaws in the disgraced Madoff fund.
FTSE-listed Man Group, which has $72bn (£47bn) of assets under management, said earlier this week that it had $360m invested in two funds exposed to Madoff Securities and is thought to have begun its own investigation.
Fintag says Mistakes were made, especially by RMF, but what really concerns me is the concentration. Tremont appear to have put 50% of their assets into Madoff funds. I know Tremont and Madoff were lovers but this is not what you call diversification is it?
Barack Obama is today expected to announce his own choice for the new chairman of the Securities and Exchange Commission as the Wall Street watchdog comes under fire to explain how it failed to spot the world's biggest fraud.
The US President Elect, who takes office on January 20, is to name Mary Schapiro, currently head of Wall Street's new self-regulator, the Financial Industry Regulatory Authority.
While every new US President appoints his own SEC chairman, the swift replacement of the present incumbent - Christopher Cox - comes at a time when the regulator is fielding bitter accusations that it has failed American investors.
Fintag says Not the right move. Obama needs to replace the SEC with another regulator. The SEC is not fit for purpose and as any consultant would tell you, if the brand is dead, replace it with another.
MARKETS NEWS AFTERNOON; DOLLAR IN RECORD DAILY FALL AGAINST EURO; POUND FALLS TO RECORD LOW OF £0.93 PER EURO
The US dollar fell the most against the euro since its launch in 1999 debut and dropped to a 13-year low versus the yen after the Federal Reserve cut its target lending rate to as low as zero.
The pound fell to a record against the euro after a report showed that the UK lost 75,700 jobs in November - - the fastest pace since 1991.
Fintag says Having taken an interest in cash and currency trading, my long eur / short gbp trades have paid off handsomely.
“As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.”
For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million.
The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill's mortgage business.
Fintag says It was a great business model - getting a bonus based on unrealised long term profits. So why weren't the stock holders complaining? Because their stocks were rising too on unrealised profits. Those were the days but no more.
O'Neal et al must wake up every morning and punch the air for they have made their money. Time was on their side. But I am sure in 10 years time it will all happen again for our memories fade too easily.
hedge funds review says " Funds need to challenge traditional hedge fund employment model "
Unemployment is rising at its fastest rate in almost two decades, and could climb as high as three million by 2010. The Office for National Statistics (ONS) reported yesterday that a further 75,700 Britons found themselves on Jobseeker's Allowance last month, the steepest rise since 1991. Many economists predict that the growing toll of redundancies - with 27,000 set to go at Woolworths - could push that figure over 100,000 each month, as the recession takes an unrelenting grip on the economy.
The jobseekers "claimant count" crested the one million mark last month for the first time since July 2000. At 1.07 million, it is up 257,000 on the same period last year. The unemployment total, on the internationally agreed definition, now stands at 1.864 million, or 6 per cent of the workforce, its highest since 1997. The increase of 137,000 in the three months to October is the tenth successive rise
Fintag says Inflation is so much warmer than unemployment. For many graduates, gone are the days when they chose their employers. Employers are choosing graduates and not many of them.
"Madoff Securities is the world's largest Ponzi Scheme." This was the conclusion of the Securities and Exchange Commission, Wall Street's regulator, when it charged Bernard Madoff with a fraud of $50bn (£32.2bn) proportions last Thursday, a day after the veteran trader's sons called the police and turned him in.
But hang on, the quote is not from the SEC. It is from Harry Markopolos, a fast-talking Boston accountant, from a letter he wrote to the SEC in 1999 after he began snooping around Mr Madoff's firm. Mr Markopolos wrote again and again - but for nine years, the SEC failed to investigate and failed to uncover what now looks like the biggest scam in Wall Street's history.
To say the failure is an embarrassment would be to understate it. For an organisation already fighting for its survival, and assailed for facilitating the Wall Street free-for-all that has now trashed the credit markets, this is a new crisis it could do without.
Fintag says Yes is the answer; but then many investors were also napping.
“THE BIGGEST BUBBLE OF ALL . . . U.S. GOVERNMENT DEBT”
PhD economist Marc Faber said in a recent interview that the last bubble to crash will be in long-term U.S. treasury bonds. Indeed, Faber has suggested shorting long-term treasuries at just the right moment. (He also is confident that - sooner or later - the U.S will go bankrupt).
Reuters correspondent and former Sempra economist John Kemp points out some irony regarding the fed's policy regarding long-term treasuries:
The Fed's decision to cut interest rates to between zero and 0.25 percent, coupled with a promise to keep them there for an extended period, and the threat to conduct even more unconventional operations in the longer-dated Treasury market risks the biggest bubble of all, this time in the U.S. government debt....
Fintag says Bernanke is clueless and is playing with his chemistry set, testing out new formulas and seeing what happens. He has no risk because he has a nice state pension fund and will always be employed.
In a big case largely gone bust, a jury Wednesday convicted three men who used tax shelters marketed by accounting giant KPMG to help rich people escape more than a billion dollars in taxes, but it exonerated a fourth man who had been jailed for five months.
The only trial in what the government once touted as its biggest tax fraud case ever ended with U.S. District Judge Lewis A. Kaplan in Manhattan telling David Greenberg that his exoneration proved he had suffered an unfortunate injustice
Fintag says Are there any decent people out there anymore?
MORGAN STANLEY BOUGHT BACK ITS OWN DEBT TO AVOID `BAD SIGNAL'
Morgan Stanley repurchased $12.3 billion of its own bonds in the past three months ``at incredibly distressed levels'' to try to limit the declines as investors became concerned about the company's credit quality.
``We were buying debt as part of a debt defense,'' Chief Financial Officer Colm Kelleher told analysts during a conference call today. ``If I had let it sit out there, it would have sent a very bad signal.''
Morgan Stanley bonds tumbled after the Sept. 15 bankruptcy of smaller rival Lehman Brothers Holdings Inc., with 6.625% senior unsecured notes that mature in April 2018 dropping as low as 61 cents on the dollar on Oct. 10. They were trading at 86.5 cents on the dollar today.
Fintag says And why not?!
CITI HAS BUILT 'A WORLD CLASS INVESTMENT BANK' - REALLY ?
Another restructuring announced at Citi, and yet again it involves the corporate and investment banking units. What's interesting about this one though is that Edward 'Ned' Kelly, who runs global banking, claims that Citi has 'built a world class investment bank'. Right, the same investment banking unit that wrote down billions, lost billions and caused the firm to go cap in hand to the US government for a bailout! Absolutely 'world class'.
Fintag says Well it's not an Investment Bank. It has closed many offices so it is not global. So Citi has once again lied. Well at least it is consistent.
Disgraced Wall Street investment manager Bernard Madoff, accused of orchestrating a $50 billion fraud, was put under house arrest on Wednesday.
BNP Paribas SA became the latest European bank to reveal its exposure to the scandal, and its stock was the main loser among Europe's top banks, as the chairman of the U.S. Securities and Exchange Commission again answered questions about why the alleged fraud went on for a decade.
Fintag says Confined to his USD7m mansion. That must be tough.
Another day brings more news of the downsizing taking place at the Citadel Investment Group, Kenneth C. Griffin's giant hedge fund firm.
Citadel, based in Chicago, shut down its special situations group last week after its strategy racked up big losses for the firm. People close to the group said that at one point several years ago its strategy covered as much as 15 percent of Citadel's total assets under management, but it had recently been pared down to about 3 percent of the firm's overall portfolio as several investments turned sour.
Fintag says The clown has lost his nose. Everyday, another part of the Citadel clown outfit falls off. [Editor: uh?]
BIG CUT IN OPEC OIL PRODUCTION FAILS TO STOP PRICES FALLING TO 4½-YEAR LOW
Oil prices slipped to a four-and-half-year low last night even as Opec announced its largest production cut, totalling nearly 5 per cent of global output, in the cartel's latest effort to bolster prices.
At a meeting in Oran, Algeria, the organisation of oil exporters said that it would slash supplies by a further 2.2 million barrels a day to 24.84 million barrels from January 1. The cut exceeded Opec's previous record cut in 1999 of 1.7 million barrels.
Abhisit Vejjajiv - Thailand's new prime minister - is the latest wearer of the distinctive light and dark blue striped neckwear to pop up at the top of his chosen career. Once again Eton appears to be the school to go to if you want to get ahead, or keep quiet about if you don't want to be seen as ridiculously privileged. In the charity sector, it's a past that people still like to bury. OE novelists and broadcasting figures are thin on the ground. But, while there's no empire left for Eton's playing fields to prepare its pupils to rule, they are fanning out successfully - and occasionally disgracefully - into other fields.
Fintag says Its a good school and one of the few things that the UK excels in. As an OE myself, it makes sense that we should run the world.
WORLD CONFIDENCE DROPS AS SLUMP DEEPENS, BLOOMBERG SURVEY SHOWS
Confidence in the world economy fell in December as a recession spread beyond the U.S. and growth weakened in China and Latin America, a survey of Bloomberg users on six continents showed.
The Bloomberg Professional Global Confidence Index slipped to 6.1 from 6.6 in November. A reading below 50 means pessimists outnumber optimists. The index, which is a year old, reached an all-time low of 4 in October.
“Confidence is still very shaky,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore, who took part in the survey. “Some countries are already in recession and 2009 will be even more challenging.
Fintag says One mustn't forget that Bloomberg makes its money renting out terminals and news services. With smaller banks and few hedge funds, the Bloomberg empire gets a little smaller so it has a right to be gloomy.
Footnote Apologies for a rather dull newsletter. But thank you for all the emails; some have me rolling on the floor in tears. Keep them coming. I never reply but do read them all. Well I do reply but only if there is a chance of a date and some fun at the Dorchester afterwards [Editor: And Mrs Fintag is happy with this?]
15 comments
BrianSJ said ...
Ref Abhisit Vejjajiv. There was a comment on Guido Fawkes about the Old School Thai.
18 Dec 08 - 07:44 gmt
anonymous said ...
perfect trade for MS: issue debt at 100, buy back at 60, issue new govt. backed debt at 100. lather, rinse, repeat. get bonus anyway
18 Dec 08 - 07:54 gmt
anonymous said ...
What's your view on DB not redeeming callable debt and paying step up instead? Seems sensible as so expensive to issue at the month but mkt unhappy!
18 Dec 08 - 08:17 gmt
anonymous said ...
hahahahaha - Fin, you are no Old Etonian. You're not stuffy enough and your spelling is too poor.
18 Dec 08 - 08:56 gmt
GalwayBoy said ...
Head Boy has a totally different meaning at Slough Grammar
18 Dec 08 - 09:08 gmt
GP said ...
who was your favorite beak?!
18 Dec 08 - 10:00 gmt
Sweet & Sour said ...
Fag Tin?
18 Dec 08 - 10:35 gmt
Sweet & Sour said ...
No mention of quantitative easing, why? Also no anti-Brown rants, why? Maybe Fin is moving with the opinion polls? Will he join the newly polished and packaged Mandelsonian New Libor?
18 Dec 08 - 10:49 gmt
Sweet & Sour said ...
Voters are sceptical of the opposition's ability to handle the economy. Asked to compare Cameron and Gordon Brown on a series of characteristics, Brown pulls ahead by 11 points as the person most likely to get the economy back on track..... That's got to hurt
18 Dec 08 - 11:34 gmt
cockyspiv said ...
The proletariat never cease to amaze me. They are now entrusting the man who crashed the train to put the train back on the track. Its like placing an ambulance at the bottom of a dangerous cliff rather than building a fence at the top.
18 Dec 08 - 13:24 gmt
anonymous said ...
Mrs. Fintag? There's a Mrs. in the pic? I just assumed Fin was rolling in the hay with Ms. R.
18 Dec 08 - 16:07 gmt
anonymous said ...
Mrs. Fintag? There's a Mrs. in the pic? I just assumed Fin was rolling in the hay with Ms. R.
18 Dec 08 - 16:08 gmt
anonymous said ...
I don't believe there is a Mrs. Bet he's doing the deed with Ms r
18 Dec 08 - 21:01 gmt
anonymous said ...
one would hope he has higher standards..
18 Dec 08 - 21:31 gmt
Moral Majority said ...
I appear to be in the middle of a page from "Heat" - what's all this petty gossiping got to do with anything?!
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