Thursday, July 26, 2012

Super Mario is turning into Ben Bernanke

mario draghi © nintendo

News comments:
Spain is to be saved. Hallelujah! Deja Vu ....

The ECB is going to bring out its nuclear weapons, its printing presses, its lawyers and just go for it. Save Spain at all costs to save the Euro.

In the meantime the plight of Cyprus and Greece is ignored but with super Mario Draghi playing with the markets like a god on speed, spouting out his Europe is getting even closer and all its countries are in it together like the three Musketeers, the silly season continues unabated.

The only way the ECB can do its job is to issue Eurobonds and print Euros. He believes the Germans are on board in underwriting the Euro fiasco (if you say it is all fine enough times, the markets will believe you too) and the European sovereign debt crisis will go away and embarrass the Credit Rating Agencies into looking like fools.

Super Mario is turning into Ben Bernanke; lots of plans and ideas to distort the markets in the short term and screw it all up for the rest of us in the long term.

Remember Sweden in the 1990s? It looked just like most of the European countries now. Shot to pieces. So Sweden blew itself up, started over and is looking pretty healthy (despite all those thriller novels).

Pain leads to gain. Saying words leads to Peter and the Wolf.

Today's shorts:
Super Mario to wed an American man (telegraph)

A UK leader says the country is in really good shape (guardian)

Today's longs:
Sweden women (sfgate)

Markets to tank later next week.

Tuesday, July 17, 2012

UK uses dodgy banks to collect tax

hmrc © corbis

News comments:
The silly season continues.

Did you know the UK collects its taxes and deposits them in an American bank? Yep, Citi collects the tax of UK citizens. Isn't that bizarre? (HMRC Bank Accounts)

But then it gets worse. If you want to pay some pension contributions you pay them into Alliance & Leicester. A bank owned by a Spanish bank, Santander. (HMRC Bank Accounts)

Now I wouldn't dare say that Citi and Santander are banks with a reputation but ...

Citi is the worlds largest money launderer (rinse) (businessweek)

Santander is bust (dailyrecord)

Why don't HMRC use a UK tax payer owned bank like RBS or LLoyds? They need liquidity and deposits as much as any other bank.

Truly shocking.

Today's shorts:
HMRC to fine people for not being tax payers (thisismoney)

HMRC clamps down on SDT (ftadviser)

BBC rapped for tax offences (dailymail)

Beer to get stamp duty (bighospitality)

Today's longs:
Brits say NON (independent)

HMRC to be fined by FSA for money laundering failures.

Monday, July 16, 2012

The death of the USA is greatly exaggerated

8 mile 313 Detroit © fintag

News comments:
Following some shocking news coming out of America, I decided to use up some airmiles and go and see what is going on (also an excuse to avoid the olympics and get some Vitamin D).

Headlines such as "American cities are going bust" (latimes) and "Gary makes Detroit look like Mayfair" (dailymail) have given the impression the good days are over.

Having just watched the pilot episode of the Newsroom where in the first 15 minutes the greatness of the USA is ridiculed, it is clear a huge cleansing and starting over revolution is occurring in this super power.

However, unlike Europe where the crap and the useless are hailed as victims that need to be supported (Greece, Spain, Italy, France ...) and everyone suffers, the US knows being beaten up is good medicine.

Capitalism is working and clearing out the chaff from the wheat. America will decline and then rise up and teach the world to sing again.

So despite feeling alienated in a place like Detroit where houses can be picked up for a few bucks, you just know America can regenerate. Obama maybe slowing down this rebirth but there is something in the air.

Today's shorts:
Shock Horror - The oil industry isn't transparent (telegraph) (cnbc)

JP Morgan shoots its foot again (bloomberg)

US Cars Loans - the new subprime (fa)

Today's longs:
American Beer (cnbc)

Obama to delay American recovery until he leaves office.

Wednesday, July 11, 2012

Dinosaur banks exposed as being dinosaurs

cobblers © fintag

The silly season is upon us so let us play a game to demonstrate why banks are not fit for purpose.

Efficient companies that move data around quickly tend to use up to date technology. It makes sense. Facebook, Amazon, Google - even Microsoft use the latest stuff because it is faster, more accurate and easy to develop and maintain than the old stuff. Hiring someone who can code a programming language designed in 1959 (COBOL) is pretty hard these days.

But guess what? Some bank's still run on COBOL. And Sybase. And DB/2. The spaghetti web of systems most banks use means patches and fixes and rarely new developments or full blown replacement of legacy systems. The reporting systems are legendary. They are really poor (except Goldman Sachs to some extent). Exposures unknown. Value at Risks off the charts. Banks may appear to be glossy on the outside but inside they still use quill pens and HP calculators.

Here is the game:

Click here this and type in the keyword box the word COBOL (make sure the country is UK).

Hey presto! JP Morgan and Merrill Lynch are trying to hire people with COBOL skills.

Type in MySQL (used by Facebook, Amazon, etc).

Not one investment bank.

Try DB2 or SYBASE.

Yep. Mostly banks.

The banks need to wiped out so new kids can come in and do it properly. Costs would fall, efficiency would increase and capital requirements would tumble. If capitalism were allowed to work properly, these old dinosaurs would have died off and been replaced by men and women with beards.

But alas, this is not the case thanks to the technocrats and self interested banking lobby groups wanting to keep the dinosaurs alive and provide jobs to people in their 80s.

News comments:

Today's shorts:
German courts put Euro into a coma (despeigel)

Spain gives up on its economy (reuters)

Today's longs:
Correlation is the new sitcom (marketwatch)

Gossip: to buyout Goldman Sachs.

Tuesday, July 10, 2012

String up a banker called Dave

© fintag

News comments:
As an ex banker, I know how deluded investment bankers are.

I was so deluded I thought trading stuff that only a few people understood and ripping off the useless and the useless meant I was entitled to be paid handsomely for the effort. Of course this was before governments sponsored banks and inadvertently made the situation worse. Delusion about being too big to fail and all that.

Regulators and technocrats have bust the banking model. Banks don't want your money as it's too risky (where did it come from? Will you be wanting leverage? Are you a money launderer?) and prefer grabbing cheap money from governments. As for lending money, well the best place is the ECB. Who wants the risk of lending to companies who might not service the debt. Or worse not pay it back?

However, I have some sympathy with the banks. It is not all their fault. The regulators have distorted the banking model. Banks have to police their own activities and tell regulators what they do (suspicious transactions to money laundering). Lots more costs and less innovation. Banks have to report trades, accounts, bonuses, stewardship controls, how many non execs have never fallen asleep at board meetings ...

But we are all tired of the excuses. The latest "string up a banker" is the fallout of the LIBOR collusion and learning most of the banking markets are rigged. Well this isn't true at all. Only the most illiquid are. And this is where I bash Markit again (fintag), the most illiquid bank self serving idea that was the primary reason we had the subprime mezzanine debacle and a good night out is at the local soup kitchen.

I tried to open a bank account last week. Don't bother. I tried 5 European banks and gave up. I wasn't willing to submit my urine. And then I tried an Indian bank and an African bank. Account was opened the same day. Whether I get to see my money again is my risk so why should I struggle to open an account at a fully regulated bank with a compensation scheme?

Dave is the way forward

Channel 4 - The Bank of Dave


Today's shorts:
Geezer goes begging (bloomberg)

Today's longs:
Norway readies up to buy Spain (reuters)

Private banks are the new banks.

Friday, July 6, 2012

Will this woman burst the pimple?

very nice ©

News comments:
There are a handful of people whose hands hover over the button.

Many of them are grumpy retrospective deluded doom mongerers such as the Head of the IMF, Ben Bernanke, Mervyn King and George Osbourne. But out of these out of their depth muppets we have a new hero emerging who could determine the end of the Euro and bring peace and stability to the world's global markets.

An economically small Euro country, but with something the USA would love to have - a triple A rating, has decided bailing out the feckless is not in their interest. (economic times)

Finland is run by Jutta Urpilainen, a fiesty no nonsense leader who has sense on her side.

Is she the new Margaret Thatcher? Let us hope so.

Today's shorts:
Barclays to be wound down (reuters)

Today's longs:
China readies its fire power (marketwatch)

Unemployed man to launch new hedge fund - "Geezer Capital".

Tuesday, July 3, 2012

When will Germany lose its AAA?

german car © fintag

News comments:
The new president of the EU is from Cyprus.

Cyprus as you know is being propped up by the Russians and is need of free bailout cash. Not much but enough to contribute to the death spiral that is Europe.

The sugar daddy that is keeping Europe together, Germany, is finding its inherited wealth being depleted. Although 15% of Germany jobs are in the luxury car industry which is booming as buyers from Asia buy the brand, German growth has stagnated. It would love to instigate a Keynesian shot of coke but this isn't possible because there isn't enough German coke to feed itself and nearly every other Euro country. The scientist euro-crats maybe trying to synthetically create some coke but the side effects are completely unknown. Germans don't do uncertainty hence their reluctance to use it.

Germany is in trouble. For example banks like partially nationalised Commerzbank are exposed to Spain to the tune of USD18 billion. It won't be buying anymore Spanish risk anytime soon so what do companies in Spain do to raise capital? They have to go to there local banks which are zombie bust. As the weaker European countries get weaker so does Germany.

The question is not if but when will Germany lose its AAA? The CRA's have been clever at undermining a countries sovereign rating by attacking the financial institutions that keep the blood flowing. As we have seen with Greece and Spain, once they are done with the banks, next it is the sovereign state. So when will it be Germany's turn?

Today's shorts:
The Vatican Bank (washington post)

Serco ends 50 year relationship with Germany (ft)

Today's longs:
Bobby Geezer swords himself (marketwatch)

France to close down its farming industry to help Germany (reuters)

Libor setting to be outsourced to Macau.