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TraderJoe
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Credit Derivatives & Subprime Crisis

August 13th, 2008, 2:05 am

Boy, if only those big IB's had spent a billion on risk management eh? Think of all the money they would have saved ($40billion and counting at several). I think a change of culture is in the offing ...
 
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TraderJoe
Posts: 11048
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Credit Derivatives & Subprime Crisis

August 15th, 2008, 12:12 pm

QuoteNo size fits all Aug 14th 2008From The Economist print editionDon’t blame banks’ business models for the credit crisis. Blame their managementFrom “you and us” to “us and them”. UBS, a dishevelled Swiss bank, announced on August 12th that it was stepping away from its integrated model and establishing its investment-banking, wealth-management and asset-management divisions as stand-alone entities. UBS’s management scoffs at the idea that this will lead to the sale of the investment bank, but a break-up is precisely what many inside and outside the bank think is needed. The problem, they say, is that big banks like UBS and America’s Citigroup have got the wrong model.It is true that risk-loving investment bankers and stability-prizing private bankers make unlikely bedfellows. The recklessness of UBS’s investment bankers has made the bank the credit crunch’s biggest total loss-maker to date. Clients of its private bank are spooked: the wealth-management arm suffered an overall loss of deposits in the second quarter. Swiss regulators are also unnerved and want a more robust capital regime for the country’s big banks.And there is a good case for greater simplicity in bank models. The management skills needed to excel at investment banking are different from those in retail or corporate lending. In the industry, they say that the universal-banking model is like putting together a lion and a horse.Yet, tempting as it is to believe that changing business models would solve UBS’s problems, or those of the wider industry, the evidence of the credit crisis suggests otherwise. No single model has emerged from the turmoil either wholly vindicated or entirely discredited. Credit Suisse shares a city square in Zurich and a business strategy with UBS, but has come through the past 12 months in much better shape and continues to attract money into its wealth-management division. Citigroup’s version of the universal-banking model is one where it walks into every punch going; Britain’s HSBC has been more successful in blunting the impact of its American misadventures through decent earnings in emerging markets. Of the Wall Street investment banks, Goldman Sachs has survived with its reputation enhanced. Bear Stearns did not survive at all. Pure retail banks can blow up too: Northern Rock, which was nationalised by the British government after a humiliating run on it, had a simple enough product line. A familiar storyWhat separates the winners from the losers is not models, but management. One aim of the reorganisation at UBS is to stop its investment-banking arm from funding itself with inexpensive capital thrown off by the wealth-management arm. That should not have been happening anyway. The model may have enabled traders to fund themselves too cheaply, but the bank’s managers set the internal cost of capital too low. That Credit Suisse’s boss, Brady Dougan, has an investment-banking background may help to explain why it has done a better job. And imagine if Jamie Dimon, the fêted boss of JPMorgan Chase, rather than Chuck Prince, a dancing lawyer, had been running Citigroup. The outcome would surely have been quite different.Regulators, too, should remember that no one bank model offers a clean solution to the problem of systemic risk. Simpler, slimmer institutions may be easier to police, but they are more liable to go under when the environment sours. Even smallish banks can pose systemic dangers: Bear Stearns was not big, but it still warranted a rescue. Bigger, diversified institutions may be more resilient, and they also come in handy when a buyer is needed for an ailing competitor. But they are harder to supervise, impose greater costs if they get into difficulty themselves, and can constrain competition and innovation. Some businesses will need to change because of the crisis. UBS may well have to get rid of its investment bank to shore up its reputation with its wealthy customers. The frailties of the Wall Street investment banks—in particular, their exposure to wholesale markets for funding—have become shockingly clear. But the structure of an organisation matters less than the quality of the people who lead it. For bank regulators and shareholders, the question is less “what?”, more “who?”.Chuck Prince, dancing lawyer.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 19th, 2008, 4:02 pm

QuoteQuite amusing really - the present right wing US administration adopting socialist bail out policies at Freddie Mac and Fanny Mae. Go the full measure and Nationalise them, why not? Ho-ho.
 
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ppauper
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Credit Derivatives & Subprime Crisis

August 20th, 2008, 12:28 pm

QuoteOriginally posted by: TraderJoeQuoteQuite amusing really - the present right wing US administration adopting socialist bail out policies at Freddie Mac and Fanny Mae. Go the full measure and Nationalise them, why not? Ho-ho.it demonstrates once again what the right-wing of the republican party (the real right-wing, the paleoconservatives who are the conservative republicans of yore) has been saying all along, that "compassionate conservatism" is a codeword for "liberal republicanism".Besides which, isn't this a bailout by the DEMOCRATIC CONGRESS ?Quotea vast new claim on the United States Treasury is being enacted into law by Congressional Democrats. On Wednesday, the House of Representatives voted to bail out Freddie Mac and Fannie Mae with a porked-up bill that allowed only limited debate.An open-ended, potentially multiple-trillion dollar piece of legislation came out of committee at 6:30 p.m. (July 22, 2008) and was voted upon on the floor of the House at 2:30 p.m. the next afternoon. The same is occurring in the Senate, Majority Leader Harry Reid (D-Nev.) will bundle all the legislation together in one massive omnibus bill -- The Advancing America's Priorities Act. Sweeping housing relief bill sent to Bush after approval by SenateQuoteThe Senate.....overwhelmingly approved the measure, 72 to 13.Earlier in the week, the House approved the bill, 272 to 152.veto-proof
 
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NoelWatson
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Credit Derivatives & Subprime Crisis

August 20th, 2008, 6:59 pm

QuoteOriginally posted by: TraderJoeQuoteOriginally posted by: NoelWatson WDCI page on Bloomberg is showing different numbersPost 'em up.http://www.bloomberg.com/apps/news?pid= ... realestate
 
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TraderJoe
Posts: 11048
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Credit Derivatives & Subprime Crisis

August 21st, 2008, 12:11 am

Let's have a look at the old scoreboard:QuoteFirm.......... Writedown & Loss.....Capital Raised Citigroup Inc.* .... 55.1 .... 49.1Merrill Lynch & Co. .... 51.8 .... 29.9UBS AG .... 44.2 .... 28.1HSBC Holdings Plc .... 27.4 .... 3.9Wachovia Corporation .... 22.7 .... 11.0Bank of America Corp. .... 21.2 .... 20.7IKB Deutsche Industriebank AG* .... 15.1 .... 12.5Washington Mutual Inc. .... 14.8 .... 12.1Royal Bank of Scotland Group Plc .... 14.6 .... 23.8Morgan Stanley .... 14.4 .... 5.6JPMorgan Chase & Co.* .... 14.3 .... 9.5Deutsche Bank AG .... 10.6 .... 3.2Credit Suisse Group AG .... 10.4 .... 2.7Barclays Plc* .... 10.1 .... 18.3Wells Fargo & Company .... 10.0 .... 4.0Lehman Brothers Holdings Inc. .... 8.2 .... 13.9Credit Agricole S.A. .... 7.9 .... 8.7Fortis .... 7.3 .... 7.1Bayerische Landesbank* .... 7.1.... 0.0HBOS Plc .... 7.0 .... 7.4ING Groep N.V.* .... 6.8 .... 4.7Societe Generale .... 6.7 .... 9.6Canadian Imperial Bank of Commerce* .... 6.3 .... 2.8Mizuho Financial Group Inc. .... 5.9 .... 0.0National City Corp. .... 5.4 .... 8.9Indymac Bancorp Inc .... 4.9 ....0.0Lloyds TSB Group Plc .... 4.9 .... 4.9WestLB AG .... 4.7 .... 7.4Dresdner Bank AG .... 4.0 .... 0.0BNP Paribas .... 3.9 .... 0.0Landesbank Baden-Wurttemberg .... 3.8 .... 0.0Goldman Sachs Group Inc. .... 3.8 .... 0.6E*TRADE Financial Corp. .... 3.6 .... 2.4Nomura Holdings Inc. .... 3.3 .... 1.1Natixis .... 3.2 .... 6.6Bear Stearns Companies Inc. .... 3.2 .... 0.0HSH Nordbank AG .... 2.7 ....1.9Landesbank Sachsen AG .... 2.6 .... 0.0UniCredit SpA .... 2.5 .... 0.0Commerzbank AG .... 2.3 .... 0.0ABN AMRO Holding NV .... 2.3 .... 0.0Bank of China Ltd .... 2.0 .... 0.0DZ Bank AG .... 2.0 .... 0.0Fifth Third Bancorp 1.9 .... 2.6Bank Hapoalim B.M. .... 1.7 ....2.4Rabobank .... 1.6 .... 0.0Mitsubishi UFJ Financial Group .... 1.6 .... 1.5Royal Bank of Canada .... 1.5 ....0.0Marshall & Ilsley Corp. .... 1.4 .... 0.0Alliance & Leicester Plc .... 1.3 .... 0.0U.S. Bancorp .... 1.3 .... 0.0Dexia SA .... 1.2 .... 0.0KeyCorp .... 1.2 .... 1.6Groupe Caisse d'Epargne .... 1.2 .... 0.0Hypo Real Estate Holding AG* .... 1.2 .... 0.0Sovereign Bancorp Inc. .... 1.0 .... 1.9Gulf International Bank .... 1.0 .... 1.0Sumitomo Mitsui Financial Group .... 0.9 .... 4.8Sumitomo Trust and Banking Co..... 0.7 .... 1.0DBS Group Holdings Limited .... 0.2 .... 1.1Other European Banks* .... 7.4 .... 2.2 (not listed above) Other Asian Banks* .... 5.5 .... 7.8 (not listed above) Other US Banks .... 2.9 .... 1.9 (not listed above) Other Canadian Banks .... 1.8 .... 0.0 (not listed above) ________ ________ TOTAL (billions) ............... 503.8 .... 352.5
Last edited by TraderJoe on August 20th, 2008, 10:00 pm, edited 1 time in total.
 
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ppauper
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Joined: November 15th, 2001, 1:29 pm

Credit Derivatives & Subprime Crisis

August 26th, 2008, 1:14 pm

Hussein: Can't allow Fannie, Freddie to collapse
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 29th, 2008, 5:21 pm

Is it time to nationalise America’s mortgage giants—and then to dismantle them?QuoteThis is capitalism at its worst: it means shareholders and executives reap the profits, but the taxpayer bears the losses.
 
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TraderJoe
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Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 29th, 2008, 5:24 pm

Why the credit crunch has lasted so long.
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Credit Derivatives & Subprime Crisis

August 30th, 2008, 11:46 am

http://www.bloomberg.com/apps/news?pid= ... =asiaQuote Aug. 22 (Bloomberg) -- A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. ``If it is not the end of the world, it is the end of the current international financial system.'' If the Ponzi scheme collapsed it would certainly be a catastrophe for China. I think China blackmailed Paulson - if you don't back Fannie and Freddie we don't buy treasuries.
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Credit Derivatives & Subprime Crisis

August 30th, 2008, 11:48 am

http://news.bbc.co.uk/1/hi/business/7589291.stmoh and UK Treasury Secretary admits the UK is facing the "worst economic crisis in 60 years."Not sure what was so bad in 1948 - perhaps he meant worst in 80 years but couldn't quite bring himself to say it.
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 30th, 2008, 2:08 pm

Why Alistair Darling has suddenly decided to go round shouting the sky is falling like some demented woman is anybody's guess.
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Credit Derivatives & Subprime Crisis

August 31st, 2008, 7:05 pm

QuoteOriginally posted by: TraderJoeWhy Alistair Darling has suddenly decided to go round shouting the sky is falling like some demented woman is anybody's guess.In the US the Bush administration is doing everything possible to buy time so the next administration takes the blame. I can only assume that in the UK the current Government doesn't have that luxury and so they've gone into panic mode instead. Perhaps they're trying to prepare the public for the bad times ahead.
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Credit Derivatives & Subprime Crisis

September 1st, 2008, 8:03 pm

looks like the UK economy is just falling apart. Incredible.
 
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penguina
Posts: 174
Joined: August 17th, 2008, 11:36 pm

Credit Derivatives & Subprime Crisis

September 4th, 2008, 3:40 pm

http://europe.pimco.com/LeftNav/Feature ... re.htmBill Gross panickingWelcome to deflation.QuoteStep 2 on our delevering blackboard therefore has stalled and is inevitably morphing towards Step 3. Assets are still being liquidated but there is an increasing reluctance on the part of the private market to risk any more of its own capital. Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning. There may be a Jim Cramer bull market somewhere, but it’s primarily a mirage unless and until we get the entrance of new balance sheets, and a new source of liquidity willing to support asset prices.New balance sheets? Is this now some Deloitte & Touche metaphor? Hardly. What I mean, what our blackboard and our Investment Committee point out is that to ultimately stop this asset/debt deflation, a fresh and substantial new source of buying power is required. This became all too obvious as the Treasury’s attempt to entice additional capital into Freddie and Fannie came up empty. Yet this same dilemma is and will continue to confront all highly levered institutions in the throes of asset liquidation. Without a new balance sheet, their only resort is to sell assets, which in many cases leads to further price declines, or ultimately debt liquidation/default.
Last edited by penguina on September 3rd, 2008, 10:00 pm, edited 1 time in total.
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