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Times: "20,000 City Workers Face Redundancy"

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http://business.timesonline.co.uk/tol/busi...icle3602122.ece

The Sunday Times

March 23, 2008

And now the human cost as workers brace for redundancies
Job losses in London’s financial services sector could reach as high as 20,000
Ben Marlow
IF the past eight months in the City have been grim, then the financial sector should hold on tight: the situation is likely to get worse and job losses in London could surpass those seen after the dotcom crash, according to experts.
As the City digests the bailout of Bear Stearns and prepares for an economic downturn, forecasters are tearing up the job-market predictions they made only a few months ago.
Experian Business Strategies said that job losses from a workforce of about 350,000 in London’s financial-services sector
may reach as high as 20,000
- nearly 20% more than the 17,000 witnessed after the collapse of the dotcom bubble in 2000.
Andrew Burrell, an economist at Experian, said: “This is different to the dotcom crash – the downturn was in a sector not an industry.
This is a more deep-rooted, fundamental crisis. Northern Rock seemed like a one-off but [the problem] is more systemic.”

The implications for London area property prices is obvious. However, I think the Times estimate is exaggerated. With a melt-down of the proportions we are seeing the redundancy levels will exceed 30% of the total City workforce.

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If the 'city' will run without these people, what were they actually doing before?

On a separate note I have a friend (officer in army - tanks donchaknow) who's just resigned so he could "walk into a money-job in the city"....

I'm sure they'll keep his turret warm for him. Actually, very nice bloke (aren't all soldiers?) but I winced when he said this with so much confidence. I recommended he requested a posting away from the shooting instead but he said he couldn't stand it any more. 18 hour days for six to nine months in a tent.

So, back to my original question - what DO they do in the 'city'?

Edited by 29929BlackTuesday

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If the 'city' will run without these people, what were they actually doing before?

On a separate note I have a friend (officer in army - tanks donchaknow) who's just resigned so he could "walk into a money-job in the city"....

I'm sure they'll keep his turret warm for him. Actually, very nice bloke (aren't all soldiers?) but I winced when he said this with so much confidence. I recommended he requested a posting away from the shooting instead but he said he couldn't stand it any more. 18 hour days for six to nine months in a tent.

So, back to my original question - what DO they do in the 'city'?

yes, even double minimum wage for sitting in a security hut must seem like luxury for most soldiers.

Seriously though, many soldiers have security and computing skills needed in the city. Then again, so do civvies.

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http://www.bankingtimes.co.uk/17032008-cit...ld-reach-10000/

March 17, 2008 City job losses could reach 10,000by Gill Montia
Story link: City job losses could reach
10,000
Predictions for job cuts in the City are 54% higher than three months ago.

Quite an advance on the more rosy predictions of a week ago. :lol:

IMO, the cull will be around 100k before the troubles are over and the faint light of recovery is seen afar off.

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So, back to my original question - what DO they do in the 'city'?

By far the biggest growth in the financial markets over the last five years has been in credit derivatives.

As you probbaly know by now the basic building block for this industry is the credit default swap (CDS), which allows banks to trade credit risk.

This itself has nothing to do with all those collapsing CDO's which are entirely different, and not credit derivatives (and many people either can't or won't understand this)

So the short answer is they trade risk, it's a bit like Las Vegas, just much, much, much bigger.

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They "trade risk"?

What a bunch of @@@@s.

DO SOMETHING USEFUL YOU F-ING USESLESS MONEY-GIMPS. You're all losing your stupid bleedin 'jobs'?? OH boo-hoo. Look in the local paper and start working for a charity - stop thinking about your bloody 'bonus' (no choice now though eh bling-boy) and HELP THE COUNTRY NOT YOURSELF.

I'm so cross.

YOu caused this you money-changers. You 'traded the risk' (oh how I want to punch you all your fat restaurant-fed faces when I typed that) did you? Did you? OOhh - well DIE BY THE SWORD AND MAYBE DO US ALL A FAVOUR AND LEAVE THE COUNTRY.

Edited by 29929BlackTuesday

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They "trade risk"?

A few examples:

It is a bit like a person selling on a betting slip or a lottery ticket. If i have a bet on the 11:15 at Ascot and the odds lengthen , I might get rid of the betting slip by selling it to a friend. Equally I could sell a lottery ticket on though there the odds are fixed.

If you are an insurance company selling on your risk exposure makes sense, as if you hold the real risk (as used to insurers) and you want to spread it out to avoid a catostrophic loss (eg Lloyd's of London) then sharing out the risk is a good idea.

In principle there was nothing wrong with Credit Default Swaps (CDS) when used for their original purpose. They insured creditors against a default by their debtors. The problems arose when they started creating CDS where no one actually had the risk of default. Basically this then turned into a big casino, betting or which firms or which securities might default. The problem with this is that it encourages bad behaviour, spreading rumours etc. Frankly such products should be made illegal in my book unless there is a underlying risk tied to an asset. Society won't tolerate people taking bets on whether someone will fly a plane into a skyscrapper for good reasons, similarly why should people be effectively encouraged to bet on banks failing.

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A few examples:

It is a bit like a person selling on a betting slip or a lottery ticket. If i have a bet on the 11:15 at Ascot and the odds lengthen , I might get rid of the betting slip by selling it to a friend. Equally I could sell a lottery ticket on though there the odds are fixed.

If you are an insurance company selling on your risk exposure makes sense, as if you hold the real risk (as used to insurers) and you want to spread it out to avoid a catostrophic loss (eg Lloyd's of London) then sharing out the risk is a good idea.

In principle there was nothing wrong with Credit Default Swaps (CDS) when used for their original purpose. They insured creditors against a default by their debtors. The problems arose when they started creating CDS where no one actually had the risk of default. Basically this then turned into a big casino, betting or which firms or which securities might default. The problem with this is that it encourages bad behaviour, spreading rumours etc. Frankly such products should be made illegal in my book unless there is a underlying risk tied to an asset. Society won't tolerate people taking bets on whether someone will fly a plane into a skyscrapper for good reasons, similarly why should people be effectively encouraged to bet on banks failing.

Is it the case that CDSs are tradeable financial instruments? And if so, is this not akin to, say, trading motor insurance policies and betting on which driver or group of drivers is less or more likely to have a car accident?

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Is it the case that CDSs are tradeable financial instruments? And if so, is this not akin to, say, trading motor insurance policies and betting on which driver or group of drivers is less or more likely to have a car accident?

Ive set up a new trading desk, we deal in which CDS deals are going to default.

Anyone want a swap on a swap.

My partner, Noel, wants to call it swap shop.

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In principle there was nothing wrong with Credit Default Swaps (CDS) when used for their original purpose. They insured creditors against a default by their debtors. The problems arose when they started creating CDS where no one actually had the risk of default. Basically this then turned into a big casino, betting or which firms or which securities might default. The problem with this is that it encourages bad behaviour, spreading rumours etc. Frankly such products should be made illegal in my book unless there is a underlying risk tied to an asset. Society won't tolerate people taking bets on whether someone will fly a plane into a skyscrapper for good reasons, similarly why should people be effectively encouraged to bet on banks failing.

Single-name CDS is similar to an insurance policy.

You can insure your car against loss/damage, so you pay someone a monthly premium to bear that risk. A well known concept.

CDS is very similar, you pay (usually quarterly) a premium, and if there is a credit event, your counterparty bears the risk.

There are a few very important differences.

Firstly credit derivatives are OTC (over the counter), which means they don't trade on an exchange. They're largely unregulated.

The other really big difference is that you don't have to own the underlying asset. If you have an insurance policy on a car, you have to prove you own the vehicle. With CDS you don't, and that's where they lend themselves to speculation.

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Single-name CDS is similar to an insurance policy.

You can insure your car against loss/damage, so you pay someone a monthly premium to bear that risk. A well known concept.

CDS is very similar, you pay (usually quarterly) a premium, and if there is a credit event, your counterparty bears the risk.

There are a few very important differences.

Firstly credit derivatives are OTC (over the counter), which means they don't trade on an exchange. They're largely unregulated.

The other really big difference is that you don't have to own the underlying asset. If you have an insurance policy on a car, you have to prove you own the vehicle. With CDS you don't, and that's where they lend themselves to speculation.

Suspect there will be growth trading other "Non Stuff" such as carbon allowances.

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Single-name CDS is similar to an insurance policy.

You can insure your car against loss/damage, so you pay someone a monthly premium to bear that risk. A well known concept.

CDS is very similar, you pay (usually quarterly) a premium, and if there is a credit event, your counterparty bears the risk.

There are a few very important differences.

Firstly credit derivatives are OTC (over the counter), which means they don't trade on an exchange. They're largely unregulated.

The other really big difference is that you don't have to own the underlying asset. If you have an insurance policy on a car, you have to prove you own the vehicle. With CDS you don't, and that's where they lend themselves to speculation.

Which recent documentry was it that said CDS was a problem waiting to happen and could be very bad

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They "trade risk"?

What a bunch of @@@@s.

DO SOMETHING USEFUL YOU F-ING USESLESS MONEY-GIMPS. You're all losing your stupid bleedin 'jobs'?? OH boo-hoo. Look in the local paper and start working for a charity - stop thinking about your bloody 'bonus' (no choice now though eh bling-boy) and HELP THE COUNTRY NOT YOURSELF.

I'm so cross.

YOu caused this you money-changers. You 'traded the risk' (oh how I want to punch you all your fat restaurant-fed faces when I typed that) did you? Did you? OOhh - well DIE BY THE SWORD AND MAYBE DO US ALL A FAVOUR AND LEAVE THE COUNTRY.

Pretty much in agreement. The tragic thing about our troops is that they get treated like cr*p doing their tours and even worse when they come back. I mean - for Christ`s sake - one lady I sold some clothes to on Ebay couldn`t receive the items because she and her family were in emergency accommodation after she and her shrapnel-wounded husband had no permanent place to live. I`m pleased to say that the local authorities did sort them out in the end, but you seem to get scant reward for trying to help anyone except yourself these days :(

On a more positive note, I`m going to start selling cheap portable airbags that can inflate within seconds and should be able to catch the weight of a falling city trader! (Does anybody remember those arcade games from the late 70s / early 80s where you had to move a trampoline across the bottom of the screen and keep bouncing the people off the trampoline to safety?) I can imagine a real-life version of that`s going to take off soon, except I`d probably bounce the city traders onto sharpened pogo sticks! :lol::lol::lol::lol:

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By far the biggest growth in the financial markets over the last five years has been in credit derivatives.

As you probbaly know by now the basic building block for this industry is the credit default swap (CDS), which allows banks to trade credit risk.

This itself has nothing to do with all those collapsing CDO's which are entirely different, and not credit derivatives (and many people either can't or won't understand this)

So the short answer is they trade risk, it's a bit like Las Vegas, just much, much, much bigger.

I would guess CDS traders make up ~1% of traders in a typical bank, and approx 0.1% of employees.

Some CDOs are related to CDS, and a CDS is a credit derivative, so maybe I'm misreading your post?

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I would guess CDS traders make up ~1% of traders in a typical bank, and approx 0.1% of employees.

Some CDOs are related to CDS, and a CDS is a credit derivative, so maybe I'm misreading your post?

CDOs provide the collateral for many deals.

Its the defaults and failures of the CDOs that will lead to margin calls on the CDSs

And these are LEVERAGED.

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CDOs provide the collateral for many deals.

Its the defaults and failures of the CDOs that will lead to margin calls on the CDSs

And these are LEVERAGED.

Can you give an example of a deal that a CDO is used as collateral for, and why would this be related to a CDS?

Which type of CDO are you talking out, MBS/ABX or synthetic (such as ITRAXX Europe tranches)?

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Can you give an example of a deal that a CDO is used as collateral for, and why would this be related to a CDS?

Which type of CDO are you talking out, MBS/ABX or synthetic (such as ITRAXX Europe tranches)?

no.

Saw it on panorama.

The firms/investors that have bought CDOs as investments are in trouble. CDS is designed to trade the risk. A default caused by a collapse in value of a CDO would cause an event- at some time.

Or are there other areas which we are not yet aware of that we should be wary about?

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Can you give an example of a deal that a CDO is used as collateral for, and why would this be related to a CDS?

Which type of CDO are you talking out, MBS/ABX or synthetic (such as ITRAXX Europe tranches)?

My instinct is that Bloo Loo was talking tosh... but I'll let him defend his own claim. ;)

I am interested in the relation of CDS with Synthetic CDOs. I think I understand CDS now, though I'm still extremely unclear about the extent of their influence, but Synthetic CDOs remain puzzling.

Are S-CDOs traded on margin?

Do S-CDOs require CDS as one of the ingredients?

What volume of S-CDOs exist, and how has that changed over the last decade?

How are S-CDOs valued?

What effect has S-CDO (relative to vanilla CDOs) had on the market?

I presume that a S-CDO could be used as collateral... because CDOs certainly can.

So, this is more of a bunch of vaguely related questions... rather than useful information - but, ho-hum.

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Are you talking about CDS where there is no underlying obligation, such as Sainsburys, or something else?

is that possible?

Definitely is possible... in the sense in which I could buy a CDS against Sainsbury debt - without having loaned any money to Sainsbury, or having any interest at all in them otherwise. I've no idea how much of it goes on.

Edited by A.steve

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Um CDS desks are much more then 1% of a banks trades.

The whole last five years of growth has been in 2 places:

1) Equity Derivs

2) CDS - This is BY FAR the largest growth area.

I would estimate that 50% of Fixed Income is CDS / and CDOs'

Remember guys :

CDOs are actually CDS's but have had their risk sliced up and tranched - They are exactly the same idea.

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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