Monday, November 5, 2007

The curtain has just fallen away to reveal man in a grey suit with bright red braces and an Excel spreadsheet! – These financial ‘wizards’ are in fact morons!

Citigroup boss quits as sub-prime crisis grows

Prof Peter Spencer, of York University and one of the country's leading economists, said: "Citigroup is a microcosm of the whole financial system. The reason it can't work out what its losses are, is because there is no way of measuring these financial instruments."

Posted by tyrellcorporation @ 08:52 AM (1930 views)
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28 thoughts on “The curtain has just fallen away to reveal man in a grey suit with bright red braces and an Excel spreadsheet! – These financial ‘wizards’ are in fact morons!

  • I don’t know why they are having so much trouble valuing these financial instruments: zero, zip, nothing, not anything, 0, f**k all!!

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  • Yeah! Yah-boo sucks, tyrell! Thanks for your insightful comment.

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  • It took centuries for the alchemists to develop the scientific method become modern chemists and extract gold from mud. Seems these financial wizards have turned the arrow of time by a sleight of hand.
    They take gold and stir it up with less useful things into a worthless mud and say its all gold. What would you pay for a pile of mud? The value is where it started – as gold nuggets!
    A pile of mud is not worth as much as the original gold nugget.. it was all pointless snake oil selling.

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  • tyrellcorporation says:

    Yeah James and thanks for yours too mate!

    My comment was based on the fact that the guys who’ve ‘worked out’ these financial instruments don’t know their value – even roughly, to the nearest £10,000,000. The whole financial industry is a joke, make no mistake.

    We (taxpayers) are now picking up the pieces (Northern Crock) from the reckless behaviour of these idiots and if you can’t see the injustice in that James then you need to go on a morailty re-alignment course!

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  • Turns out Mr Prince is actually an ugly frog then. Can’t they just put their financial instruments up on Ebay with no reseve or best offer and see what they get.

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  • tyrellcorporation says:

    …and before James starts sniggering to himself and comes back with a witty retort about spelling… morality…

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  • tyrellcorporation says:

    MrMickey, careful, James will have a go for not making an insightful comment. References to ‘Ugly Frogs’ is hardly raising the intellectual bar is it?!?

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  • No wonder they can’t measure these financial instruments. Einstein said that in an infinite and unbounded financial universe you can measure the mass, velocity, position and direction of money, but not all four simultaneously, AND that the value for any of those measurements depends on where in that universe the observer is located.

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  • Damn right it’s not tyrell. In fact, it *is* possible to get to a decent valuation of asset backed securities. Whilst trading in those securities themselves has become distinctly illiquid, derivatives trading generally is still ticking over. The ABX indices are therefore still relevant. Now – the valuations on them aren’t pretty, with the BBB index at around 20ish and AA at 40, but the number is there. I won’t pick you up on your spelling, but given the total losses are very broadly estimated at $100bn, being able to value to the nearest £10m (0.02%) at this stage would actually be bloody good!

    For a fuller explanation of the difficulties, try this piece by the FT’s excellent Gillian Tett – one of the few journos who understands what’s going on.

    http://www.ft.com/cms/s/0/8ed4716c-8b41-11dc-95f7-0000779fd2ac.html

    Or – you could just carry on ignorantly shouting about ‘idiots’, ‘ugly frogs’ and ebay. Up to you.

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  • Tyrell, these guys know what they were doing… you have to ask the question why? it’s part of a bigger picture… yeah there will be a house market crash (merely a distraction), and these guys knew it.. if Dr Doom predicted this years ago about the housing market (even appearing on the money programme), I’m sure the bankers knew as well.. the bankers will be fine.. but the public will pay in the end.. this is how the bankers like it & how it has always been.. freshly fried BTLer’s sunny side up & ready-to-go.

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  • There’s an intellectual bar round here now?

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  • okay now I’m wondering, hearing all this bad news from across the pond, were the last UK HPC’s in a similar position?

    The impression I have is that the previous crashes were internally perpetuated, this looks to be an externally motivated crash, wonder if that is why the economists are having a hard deal coping with this and AD’s insistence that the economy is in a strong position, when in truth our economy could be Superman, the US slowdown would still be planet sized chunk of kryptonite!

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  • Minh, commenting on David Smith’s blog makes a very good point here:
    http://www.economicsuk.com/blog/000590.html#more

    Namely that the year end figures for the big banks have to be audited, unlike quarterly ones. And that the auditors may push for a mark to market valuation for all the CDOs and other “toxic waste” on their books.

    So, year end will be when we see the real trouble emerge in the banking system. (Assuming Sarbanes-Oxley and the post-Enron auditing regime is woth it’s salt.)

    BTW, James @2, are you in the property / finance business ?

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  • Darling says that underlying strength of the UK economy……………..What strength in an economy built on HPi and debt?

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  • Sarbanes-Oxley relates to the control system, not the underlying figures directly.

    That said all auditors of the big banks will very very sceptical of everything put infront of them by the banks. The audit risk is of the chart. The meaning of true and fair is under the mircoscope again.

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  • VoR – Agree with the comment – level 4 accounting will catch up with the players here… even GS, I’d bet! As for me, I’m a city boy, but not in the property business. In fact, not even personally into property, as I’m an uber-bear on that score. What riles me is the semi-informed ‘commenting’ on things they patently don’t understand – and in so doing making these boards very ranty, very bitter and undermining any credibility they might otherwise have.

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  • Wonder why it always takes my comments longest to be posted? Were I of the tin-foil hat brigade like some on here, I might start suggesting a conspiracy…

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  • planning4acrash says:

    So, year end for a re-price of gold as banks fire sale to cover losses S2R?

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  • Well said Tyrell…..I suspect that when the whole lot goes up in smoke, and I feel the fire is only just starting, it will be the taxpayer ie you , me and all the others that will have to financially pick up the pieces. But the big city bankers will have received there golden severance packages and won’t be held to account for the financial mess that they played a big part creating. The city just largely serves its own purpose in what is a financial free-for-all, with no-where near emough prudent regulation.

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  • james get a password of the webmaster

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  • tyrellcorporation says:

    James, You obviously know a great deal more than me about the world of these wierd financial intstruments – nice one! Your posts take ages to appear because they’re so complex and fact-packed! I wish I was a barrow boy trading futures, it sounds really interesting and fulfilling.

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  • Tyrellcorporation says:

    I certainly do appreciate your knowledge in this area James but this a very broad church at HPC and you will have to allow people to rant. If you want hard-core financial analysis of World economics then it’s probably best to just log-on to your intranet and chat to your mates around the room.

    I wouldn’t expect you to be able to talk with much authority about creating digital special effects for the film industry but if you said FX in a film were crap I would not try to shoot you down just because you expressed an opinion based on what you’d seen.

    IMHO these guys who’ve created this underlying financial maelstrom ARE idiots because I’m effectively paying to bail out their bad decisions. Yes it’s simplistic and ‘ranty’ but simplicity doesn’t make it irrelevant.

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  • James, good stuff, I think we need a good balance of expertise on this forum.

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  • tyrellcorporation says:

    Great quote from Peston:

    ‘Citi has given the lie to the idea that was so prevalent in markets over the past few years that financial engineering – through the medium of collateralised debt obligations and structured credit – could turn ordure into gold. So let’s hope that the painful experience of Citi and other institutions leads bankers to once again show due respect for one of the golden rules of banking: you may be able to make money from merde, but don’t pretend you’re selling anything but merde.’

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  • dohousescrashinthewoods says:

    James, I appreciate your comments – enlightening. In defence of bloggers here, not all know much about finance (I myself am an amateur) but there is a strong sense, which you have detected, that honest people are being robbed without knowing how.

    If some comments come across as ill-informed, that’s because they are. It is tough for lay people to penetrate the high church of finance, but each one has his convictions and some express them.

    My experience is that most here will listen with interest and resepct to anyone willing to share insight, so there is no need to put people down.

    If there is bitterness and ranting it is because many feel denied a home, and believe that it is wilful mis-management on the part of govenment and financiers that have caused it. To add insult to the injuury of being financially exploited, the consequences are foisted on the same ordinary people on the way down as suffered on the way up. There is something deeply unjust about anyone – from the playground to the boardroom – who refuses to accept responsibility for their actions and tries to make others pay for their mistakes.

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  • James, you weren’t James Numis on the Dispatches “The Housing Trap” documentary on Ch 4 this evening by any chance ?

    There is a tragic line in this program when the Estate Agent admits that the first time buyers will most probably be outbid by property investors.

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  • I’m so happy I sold, after watching tonights Dispatches. Felt sorry for the young families who were trying to do what my parents generation did so easily years ago, and of course if they couldn’t at least there was social housing (council). My parents generation as a former Prime Minister once said “We have never had it so good”.

    And if the silly twirp with the red braces and the excel spreadsheet helps to bring about the long awaited crash. I would buy him a drink.

    😉

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  • i love this misguided trust in audits and auditors – can someone please explain to my why claims against audit firms are so huge (Enron / Worldcom / Insurance Corp of Ireland / BCCI etc.) when they are so good at erm auditing? Oh and what exactly happened to Arthur Andersen?!?

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