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
Let's face it. This blog is at the bottom of the pile of financial news, propaganda and analysis that permeates our brains every second of the day. So why I get tens of thousands of you hanging onto my typos and ramblings every day is quite frankly silly.
Let us use Goldmorgan Stanley as an example. They have been stress tested by the US authorities to ensure they are fit for purpose. I throw a line away like "Goldmorgan have spun themselves out of that one" when they avoid having to plead to diluted investors for more cash.
In reality, thousands of man hours have been expended on producing accounting books and records from systems that are not fully implemented and using valuation models written in excel spreadsheets full of vba coding errors. Goldmorgan Stanley's accountants have been working silly hours to produce the numbers on time .
Along come some people to review. They too spend man hours checking, casting, validating and asking awkward questions like "Why do you have a hundred billion dollar siv in nevada that you trade against, is owned by you but is not consolidated into the financial statements?"
Answers come like "Because we do." The replies are "ok, I will just ignore it then".
Next the PR department who know nothing about valuing portfolios of credit card receivables write a one page propaganda statement that says "Goldmorgan Stanley is delighted to have passed the stress tests and testimony goes to the Board for running such a wonderful company ..."
Next, a hack who is just about to use up his monthly expense allowance by being entertained by an anonymous blogger, bangs out a review with some made up quotes and references to various sources. She puts it on the wires.
Another equally terrified of losing their job journalist at the Murdoch Times (now there is an institution that needs to cut back on the fruit baskets) quickly copys and pastes the report in Reuterberg and puts up another scantily researched piece.
Next, a bored Finbar Taggit, bleary eyed from the night before reads the headline, and then comes up with some cynical comment.
And you lot read it.
BARACK OBAMA'S RICH SUPPORTERS FEAR HIS TAX PLANS SHOW HE'S A CLASS WARRIOR
Some of Barack Obama's richest supporters fear they have elected a "class warrior" to the White House, who will turn America's freewheeling capitalism into a more regulated European system.
Wealthy Wall Street financiers and other business figures provided crucial support for Mr Obama during the election, backing him over the Republican candidate John McCain as the right leader to rescue the collapsing US economy.
But it is now dawning on many among them that Mr Obama was serious about his campaign trail promises to bring root and branch reform to corporate America - and that they were more than just election rhetoric.
Fintag says When I saw Obama at a Greenwich fund raising, it was evident that not all was right and I subsequently went on to say that McCain was the best choice for US president. Again proved right, all I can say is "I told you so."
fintag says " Today water was discovered on mars. But enough of frivolity."
new york times says " 'Rodeo Drive' in Greenwich Shows Vacancies "
RULES ON INVESTMENT BANK COLLAPSES TO BE OVERHAULED
The UK Treasury is to publish one of the first official documents attempting to map out how governments around the world should deal with the collapse of a major investment bank.
Recognising the fact that despite the collapse of Lehman Brothers last year authorities have still failed to overhaul the international financial system to help it cope with the failure of a large and highly inter-linked institution, the Treasury's discussion paper aims to strengthen the UK's bankruptcy system in the future.
When Lehman collapsed, the bankruptcy arrangements in the UK, which make no allowances for the type of institution affected, were criticised for being more harsh on creditors than the analogous regimes overseas. In particular, some have claimed that the firm may have shifted many of its assets from London to New York because of the Chapter 11 rules there, which give the company more time and leeway to run down their positions.
Fintag says Horse. Bolted. Stable. Sorry. Within the rules. We were all at it. Flipping heck.
Sir Allen Stanford, the Texan financier and cricket promoter accused of a $8 billion (£5.6 billion) bank fraud, is at the centre of allegations that he worked as a US government informer, according to the BBC.
A Panorama investigation has suggested that Sir Allen was shielded from an earlier inquiry into his activities because he co-operated with a US Drug Enforcement Administration (DEA) attempt to track money laundering by Latin American drug cartels.
US officials closed down his banking activities in February, alleging a vast fraud centred on his Antigua-based offshore bank. Sir Allen, 59, previously most famous as the sponsor of the Twenty20 cricket tournament, has vowed to clear his name.
Fintag says Is the series out on DVD yet? [Editor: Pathetic]
Satellite Asset Management, a big New York hedge fund founded by former protégés of George Soros, is closing its doors after poor performance led to a rush of client withdrawal requests, according to a person briefed on the matter.
Last November, Satellite, which had approximately $7 billion under management at the beginning of 2008, eliminated 30 jobs and halted investor redemption requests after suffering losses of about 35 percent in its major funds. The firm was founded by Lief Rosenblatt, Gabe Nechamkin and Mark Sonnino in 1999 after they left Soros Fund Management.
Fintag says Oh dear.
PSYCHOLOGISTS ARE BETTER STOCKMARKET SPECULATORS THAN ECONOMISTS
In a situation like this even a 'bad' share can soar dramatically in price - simply because a lot of people choose it. Assuming the first two players get the tip to buy share A from their investment banker, even if player 3 then gets a tip to choose share B, that player may decide in favour of A - after all, his predecessors have apparently been tipped off to choose this share. Player 4, taking as a motto 'one million flies can't be wrong', will find it very difficult to buck the trend and choose share B. The result is that the herd instinct sends the value of share A up to dizzying - and ultimately irrational - heights.
Fintag says So there you go. I am useless and my shrink is the best quant ever to have lived.
The Managed Funds Association has backed proposals requiring US hedge fund managers to register with the Securities and Exchange Commission (SEC) under the Investment Advisors Act of 1940.
In testimony before a congressional committee, MFA president and CEO Richard Baker said mandatory registration could help restore investor confidence in the industry.
His comments were echoed by W Todd Groome, chairman of the Alternative Investment Management Association, which also backs SEC registration.
The Federal Reserve could become the supercop for "too big to fail" companies capable of causing another financial meltdown under a proposal being seriously considered by the White House.
The Obama administration told industry officials on Friday that it was leaning toward making such a recommendation, according to officials who attended a private one-hour meeting between President Barack Obama's economic advisers and representatives from about a dozen banks, hedge funds and other financial groups.
The hedge fund industry, infamous for imposing high fees, is finally beginning to cut these charges amid heavy outflows and investor complaints after a year of losses.
Three hedge funds contacted by the Financial Times admitted to cutting their fees for new investors, usually by lowering management fees by half a percentage point to between 1 per cent and 1.5 per cent, and performance fees from 20 per cent to 10 per cent.
Fintag says Less fees, higher tax, having to live in Geneva (yawn), my life is a living hell. But it will pass and I will learn to live with having my clothes washed. Gone are the days when everything I wore, I wore once only. It is a good thing. It brings me down a peg or two. I deserve it.
financial news says " Inflows add to optimistic signs for hedge funds "
The Pope of Ponzi demanded anonymity as a cost of doing business, according to “The Madoff Affair,” an illuminating one-hour special airing tomorrow on PBS at 9 p.m. New York time. Sandra Manzke, a hedge-fund manager whose former company Tremont Group Holdings Inc. invested billions of dollars with Madoff, said she promised not to use his name in her prospectus because “that was his trading model, the black box that he used.”
Fintag says My quants fool me everyday with their black box.
In the old days when people picked stocks, you could shout at them for being useless. Now I shout at some C# code. It just isn't the same.
Fintag says Now that is interesting for I know of very few hedge funds (e.g. FRM) that use JP Morgan. Of course JPM did well with the old Bear Stearns Prime Brokerage but Administration? Where did that come from?
Reports this weekend suggested that Mr Hands, whose group Terra Firma owns music company EMI, had already moved to Guernsey, while Mr Odey of Odey Asset Management was considering abandoning Britain. Both object to the increase in the top rate of income tax to 50pc. Mr Hands' move makes him the most high-profile City executive to leave.
Last month it emerged that Hugh Osmond, the entrepreneur, and Peter Hargreaves, founder of Hargreaves Lansdowne, were considering leaving. Many City professionals are as concerned about changes to European law affecting hedge funds and private equity firms as about tax changes.
Fintag says Thankfully I had the foresight years ago to move offshore. Well, my Management company is and all I do in the UK is advise. However, my actual person will soon have to move and that is not fun. Switzerland, as pleasant as it is, has really dull restaurants.
Ms Robinson graces our pages with advice and reviews. But as a professional writer she also graces real pages in a more ghostly form, and brings her first novel, Toxic People, 'a not-so-moral take on hedge funders and hubris' - to an Internet connection near you.
Her novel, Toxic People, has been researched with the kind help of a London hedgie (and many lunches) and is based on the actual timeline of events from 2005 onwards. “It's part financial thriller and part bonkbuster,” she says. “Lots of money and lots of sex.”
Fintag says As I was saying last week, my legacy is to be immortalised in a sensational book written by our very own uber-commentator Ms R. More on this later this week.
Fin, you're definitely an accountant, I can tell from your use of language. Satellite closing is very sad, great firm
11 May 09 - 07:54 gmt
Moron said ...
This market is going to crash!!!!!!!!
11 May 09 - 09:09 gmt
anonymous said ...
I wonder how many nba/nfl and football players had money with madoff?
11 May 09 - 09:42 gmt
Finbar said ...
@TC - was it the word "casting"? Thought so ...
11 May 09 - 10:19 gmt
Moron said ...
read the prologue of toxic people....very exciting...believe the subscription model is totally wrong...book should be in print...find a big publisher....get them to throw a big book launch party.....plant a bomb and blow up the A list guests....make a lot of news.....sell a lot of books.....retire!!!!
11 May 09 - 10:48 gmt
MsR said ...
@moron Well it would be in print if my agent would get over the fact that while most novels are read by women..you can have male characters up front and still get it read by women. Don't worry I'm still working with them but as you know Moron the subject is current and so Fin and I had to move quickly. It is doing well...
11 May 09 - 10:57 gmt
MsR said ...
@moron the other issue with publishing is that they prefer if you have a media presence before they publish...they don't have marketing budgets for more than say 3 big books a year and all those tables at Borders have to be paid for..they don't just stick books on (bribed for..) So this is actually a media campaign and it's working
11 May 09 - 11:02 gmt
Top Cat said ...
@Finbar - nobody uses casting unless they were trained as an auditor...I would hazard a guess you did a few years at a predecessor firm of PwC.
11 May 09 - 11:35 gmt
anonymous said ...
MsR was it wise to be channeling Anita Dobson for yopur publicity shot?
11 May 09 - 11:51 gmt
Moron said ...
msR....just put a gun to their head and ask them to make the book the biggest goddamned launch of the year....all this media presence budget blah blah is typical publishing bs....if they see it can be a best seller they will change the rules.....all they need is a kick up their backsides!!!!
11 May 09 - 11:52 gmt
Moron said ...
rules are for losers!!!!
11 May 09 - 11:53 gmt
Maria said ...
I agree that the book should be printed. I hope things will work out and it will finally get there.
I've also read the prologue and liked it. Congratulations!
11 May 09 - 11:59 gmt
Anonymous Bull said ...
@MsR - Was the protagonist's name borrowed from the former apprentice contestant raef?
11 May 09 - 12:09 gmt
Moron said ...
anon bull....long only monkey....get out of the way of the crash now mate...I can smell blood:)))
11 May 09 - 12:21 gmt
Anonymous Bull said ...
Moron - Dont get carried away with this pulback, boy. The spx needs to break and close below the resistance level of 876 before the bears will be in charge. Just another free tip from a investor with a v long term view
11 May 09 - 12:43 gmt
Moron said ...
hah....investor with a very long term view...aka we go down a few percent a year with the overall markets for the next 10 years bcos we are long only closet indexers:))))
11 May 09 - 12:56 gmt
Moron said ...
my prediction on the toxic ppl novel....great idea....destined to be an absolute bestseller....on the lines of liars poker....will be a defining book for the industry....in theory....in practice....will die a natural death and never see the light of day....online experiment is a waste of time....:((
11 May 09 - 13:24 gmt
anonymous said ...
Moron your predictions hold no value, ever since your repeated short calling for the last 3 months, and constantly being incorrect
11 May 09 - 14:04 gmt
Long Beard said ...
OECD says the UK has bottomed. Time to buy
11 May 09 - 14:13 gmt
Long Beard said ...
I am new here. Hope I am not too intelligent.
11 May 09 - 14:14 gmt
Global EMU Inc said ...
@Long Beard. Against Moron, everyone is Albert Einstein.
11 May 09 - 14:26 gmt
Anonymous Bull said ...
Moron is a fantasist who probably window cleans over at GLG hence his schizoid view on how ppl in HF's act out..lol!
11 May 09 - 14:36 gmt
Moron said ...
window cleans at GLG.....they don't need window cleaners mate....the tears keep the whole pace clean all the time:))))
11 May 09 - 14:46 gmt
MsR said ...
@anonbull Haven't watched Apprentice in years. I have names of characters in my notes and this one seemed right for this character. @moron the debate is there but publishers have no money to market- a result of paying huge advances over past years not earned out. Eg. Rageh Omar 800K didn't earn out. My agent at WMA agrees that we prepare groundwork
11 May 09 - 14:52 gmt
anonymous said ...
Anon Bull - I reckon window cleaner probably not right. We have guys who come to water the plants, they could talk to the PMs a bit and get some front-office generic waffle for reproduction here. Bet he's one of them
11 May 09 - 15:02 gmt
Long Beard said ...
@MsR - Will Moron feature in your book as the village idiot?
11 May 09 - 15:10 gmt
MsR said ...
@longbeard What will be his back story longbeard? And when my two bankers set up their fund, is he involved. And should I give him sex in the book. Raef gets loads of it.
11 May 09 - 15:13 gmt
David S. Products said ...
Today is a Fintag classic. Laughed out loud.
11 May 09 - 15:15 gmt
FinbarsITGeek said ...
What chance does a Blogger like me have against you lot? So Play Nice …
11 May 09 - 15:18 gmt
MsR said ...
I must go and do day job which is actually writing book for someone else who is well known. But I should add that although 30,000 wds are written, Fin and I have agreed that if anything happens or good stories come along we will fit them in.
11 May 09 - 15:23 gmt
Moron said ...
the guy from GLG who spoke about window cleaners....all I have to say is this mate:)).......keep your head down and keep sobbing.....if Mannily catches u smiling.....u know what happens next:)))
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