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Financial fuckery thread

Started by Cain, March 12, 2009, 09:14:45 AM

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Scribbly

Yeah.

About three years ago we had a discussion about this in one of my classes. It was interesting. The only reason we could come up with for why the UK is important is the size of our economy - we're far larger than we should be per capita and that lets us punch above our weight. We put our faith in the ability of the noble British entrepreneur to keep that alive.

:lulz:
I had an existential crisis and all I got was this stupid gender.

Cain

I'd go a little further - size of economy, nukes and UNSC council seat.

Here are the problems though:

The UK economy is substansially bolstered by a massively outsized financial sector which is far larger for our GDP and population in comparison with almost every other developed country.  I'm fairly certain that in this case, correlation is causation, and that an outsized financial sector led to our improved economic standing - however, that standing was largely an illusion built on free credit and bad loans, as we've subsequently discovered, and increases our exposure to systemic risks in the international financial system, which is possibly the most complex man-made system in existence, and so prone to distressing and unpredictable interactions.

The United Nations was effectively gutted in 2003, when two UNSC members showed they could defy the other three without repurcussions.  It had been limping along for a while before that, but was effectively rendered impotent by this reckless display of power.  That the UK was one of the two involved in that only makes the irony delicious.  UK diplomacy is massively distrusted, and the Libyan debacle has only reinforced this opinion in Russia and China, who regretted giving the UK and France the benefit of the doubt when they did.

Our nuclear weapons are basically too expensive, especially since we don't even have an independent program (America retains the ultimate controls on at least part of our arsenal).  There is also an increasing consensus among national-security specialists, especially Cold Warriors like Henry Kissinger(!) that the risks of nuclear weapons are starting to outweigh the benefits, and that stockpiles must be reduced, and immediate response capacities taken off-line, among the UNSC Five at the very least.  In conjunction with controls on fissile material that are being floated, I see nuclear weapons becoming an outmoded method of gaining prestige, much in the way imperialism failed to confer prestige in the post-WWII world.

Our only other strategic advantage was being in the EU but not overly commited to the cause.  This was only useful so long as the USA could use the UK as a trojan horse, to make EU policies benefit the UK and America without allowing the appearance of a potential political bloc with enough power to challenge American policies on the world stage (ie a politically unified Europe).  Now America is too broke to care, and the EU will likely cease to exist.  Which leaves the UK up shit creek with no paddle. 

Scribbly

Wow... yeah. The other points were raised then too; I just forgot. But, seeing it spelled out like that...

Damn.

Thanks for the analysis Cain.
I had an existential crisis and all I got was this stupid gender.

Cain

I could go further and talk about our descent into a counterintelligence state of the kind that would make East Germany blush, our failing energy infrastructure and the North Sea oil running out, increased costs from environmental disasters due to drastically underfunding flood defence....but I think the above spells it out.

We need a unified Europe.  Otherwise we're just Belarus with ipads.

Precious Moments Zalgo

Quote from: Demolition_Squid on September 13, 2011, 11:57:54 AMIf the bank you borrowed to buy your house from goes under, presumably that debt is written off?
Your loan would be sold and the proceeds would be used to help settle the bank's debts.  You would continue making your monthly payments to the new loan holder.
I will answer ANY prayer for $39.95.*

*Unfortunately, I cannot give refunds in the event that the answer is no.

PopeTom

Quote from: Precious Moments Zalgo on September 13, 2011, 04:06:52 PM
Quote from: Demolition_Squid on September 13, 2011, 11:57:54 AMIf the bank you borrowed to buy your house from goes under, presumably that debt is written off?
Your loan would be sold and the proceeds would be used to help settle the bank's debts.  You would continue making your monthly payments to the new loan holder.

You will never be let off the hook.  When you die the hook will be passed along to your heirs.
-PopeTom

I am the result of 13.75 ± 0.13 billion years of random chance. Now that I exist I see no reason to start planning and organizing everything in my life.

Random dumb luck got me here, random dumb luck will get me to where I'm going.

Hail Eris!

Cain

Or your friends.

Check about 20 pages back, there is even a link for it.

Cain

http://www.bbc.co.uk/news/business-14927432

QuotePolice in London have arrested a 31-year-old man in connection with allegations of unauthorised trading which has cost Swiss banking group UBS an estimated $2bn (£1.3bn).

He was detained in the early hours of Thursday and remains in custody.

UBS shares fell 8% after it announced it was investigating rogue trades which would mean the bank making a loss for the third quarter of 2011.

The Swiss bank said no customer accounts were affected.

A spokesman for City of London Police, which is responsible for the city's financial district, said: "We can confirm we arrested a 31-year-old man at 3:30am on suspicion of fraud by abuse of position."

In a letter to its 65,000 staff, UBS said: "The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn.

"It is possible that this could lead UBS to report a loss for the third quarter of 2011. No client positions were affected.

"While the news is distressing, it will not change the fundamental strength of our firm.

"We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times," the bank said.

ZKB trading analyst Claude Zehnder said the news would damage confidence in UBS. "They obviously have a problem with risk management.

"With this they are losing a lot of credit that they had regained with effort."

UBS was rescued by the Swiss state in 2008 following huge losses on toxic assets held by its investment bank.

It then became embroiled in a serious tax evasion dispute with US authorities and was forced to hand over 300 client names and pay a $780m fine. There was then a second case in which it agreed to hand over data on 4,450 American clients.

UBS declined to say in which department, or country, the rogue trader operated. However, there is already speculation that the losses may have occurred in foreign exchange trades.

Earlier this month, the Swiss Central Bank shocked the markets by capping the franc against the euro at 1.20 francs. The move sent the franc-euro exchange rate up 10%, and it is rumoured that some traders lost money.

Cain

http://www.bbc.co.uk/news/business-14930126

QuoteThe European Commission has predicted that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011.

It halved its forecast for July to September to growth of just 0.2%, while the forecast for the last three months of the year is down from 0.4% to 0.1%.

The commission blamed financial market problems over the summer as well as weakening demand from outside Europe.

But it remained confident that there would not be a return to recession.

"Recoveries from financial crises are often slow and bumpy. Moreover, the EU economy is affected by a more difficult external environment, while domestic demand remains subdued," EU Economic Affairs Commissioner Olli Rehn said at a news conference to unveil the report.

"The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy."
'Integral part'

The report predicted that member states having to cut back on their spending to reduce their debt would also hit growth.

One of the countries currently cutting back its spending is Greece, which reiterated on Wednesday that it was determined to meet all the deficit reduction plans it has agreed to in exchange for its two bailouts.

There were supportive comments from eurozone leaders towards Greece on Wednesday, which boosted the stock markets on Thursday.

Eurozone leaders said Greece was an "integral" part of the eurozone.

Greece is set to receive the next loan from its initial EU and International Monetary Fund bailout later this month, but it will get this only if inspectors from the EU, European Central Bank and IMF agree that it is keeping up with its spending cut targets.

Adios

Global economics still appear to be built on a mountain of ice, and still sliding towards the bottom.

Precious Moments Zalgo

That UBS trader guy was dumb.  If, rather than costing UBS money while not affecting client accounts, he had made UBS money while trashing client accounts, he probably have been promoted rather than arrested.
I will answer ANY prayer for $39.95.*

*Unfortunately, I cannot give refunds in the event that the answer is no.

Disco Pickle

http://video.cnbc.com/gallery/?video=3000046094

Transcript of the video below, I added occasional line breaks to make it easier to read.

This thing's about to fall apart.

Quotelet's go to cnbc's michelle caruso-cabrera who's in  southwestern poland where treasury secretary tim geithner is meeting with european finance ministers. 

reporter: we heard earlier that during the news conference that the next tranche of the greek bailout would happen sometime in october if greece met all the requirements for the  lenders of last resort. we've just seen on the dow jones news wires, they are quoting an anonymous greek official speaking somewhere on the sidelines that apparently that is a bit late for the greeks and  that they may need to tap an emergency stability fund early because they are running short of cash.

they'd already said they would be running short of cash by  early october. let me show you why. from january to august of this  year, greece has actually run a bigger deficit than they did last year, 18.1 billion euro this is year compared to a year ago at this time, they only had a deficit, only, of 14.8 euros.  why? because they're spending in that time period, believe it or not, has gone up by 8.1%.

last year at this time, they'd only spent roughly 44 billion. by now, they have spent 47 billion this year. in the meantime, because of year  three of the recession, their revenues are down. i've done these calculations. they're spending roughly 1.35 billion a week. but they only bring in .87 billion of revenue a week. so they are always running about a half billion short every week. they're saying if they don't get  this next tranche, they're going to have to tap some emergency fund because they are literally going to struggle to make payroll. 

the precipitating event that would lead to a default, probably not until december when they have a next big installment. but they do have on september 23rd, for example, a 2 billion euro rollover which imagine that everybody would let all of this fall apart over just 2 billion euros. but that's the situation right now. guys, back to you. thank you very much, michelle. stick around.

we're going to talk more about this poland summit, what it means for investors around the world. joining us is louise cooper, market analyst at bgc partners in london. and at the new york stock exchange, simon hobbs of cnbc. and we're joined in the studio here by steve liesman. louise, the markets seem to have been signaling, the equity markets, at least, this week that the worst is unlikely to eventuate. they seem cheered by what they see and even today that way. do you feel that way?

no.  i'm afraid i don't. we have that big central bank intervention yesterday where they said, we're going to act together to help banks borrow short-term dollar money. so the equity markets went, hey! if you go to one of the wholesale dealing desks here,  you'll find out it's made no difference and the interbank lending rate in europe increased this morning and was a higher level than yesterday. so it is good news that all the central bankers around the world are acting together.  that is a good thing. but the terms of the deal -- if you need to almost borrow this kind of levels, the dollar levels they were suggesting, you almost are in a very difficult position.

it hasn't actually helped the funding market here in europe to be brutally frank. steve s that your take? well, i think ultimately what this dollar funding will do, melissa, is it will solve one of the problems that's out there, which is a scarcity of dollar funding either because it's not available in dollars or because there's not sufficient dollar collateral for the dollars that are needed. and i think ultimately these things have tended to help the situation rather than make them  worse. but it would be wrong to see it as the fix-all because there are many, many other things that  need to be done. this is kind of like fixing one of the shorter-term problems that's out there.  but it's not nearly the fix for the larger-term problem, which is the sovereign debt problems and the related banking issues.

michelle, how is secretary geithner received in this council in poland? 

reporter: i'm told they snicker behind his back, that he said he was invited but actually he kind of invited himself. there's a lot of back and forth. there are some members of the european union saying, why is the u.s. tell us how to run their business, look at what they did with the debt ceiling mess, they're not one to talk. he was self-deprecating in that fashion in some comments that he did make. but i wouldn't say it was a warm welcome.


michelle, i just want to get rid of one of the myths that's out there, which is that geithner is going over there presenting this idea of leveraging the efsf. in fact, i was told by a g-7 official, this issue came up and was presented to the leading european economies at the recent g-7 finance ministers meeting. it's been out there for six weeks.  if anything, the role geithner is playing would be informational.  but this issue has been out there and presented. and geithner's not going over there selling this. and i want to bring simon into this.

reporter: i think the reason people here thought that was going to happen is because the spanish finance minister said she expected to hear about leverage from tim geithner when she arrived this morning. maybe that's why people got that  impression. simon, are you surprised that tim geithner would not be warmly welcomed? these are polite people. i would be very surprised if they were rude to tim geithner. that's really not where they are. they don't see it in this kind of america versus europe in a way, from my experience.  but i want to say something very important here. let me preface it by saying this is a two-day meeting.

what's coming out now is not  necessarily where we end up by the end of the weekend. however, these are very worrying signs that are coming out because to solve the situation,  we need political will, we need coordination and we are on now three levels not getting that. the first is that as a result of the conference call between the french, the germans and the greeks on wednesday night, we thought that they were going to prevent grooek greece from  defaulting, they would give them the $8 billion euros and that they would do that relatively quickly on a wink and a nudge. that is not the case. they will run out of money, they have told us, next month.

now they're saying, we will not  make a judgment on that 8 billion until october. so they're deliberately leading a funding gap and they're trying to see other ways they could tap money. that is not a good sign. today we're supposed to have a deal on the collateral issue where the fins say, for the greek money, we want collateral.  the fins are saying, there is no deal on the table. without a deal on collateral, you can't write the legislation that goes before the germans  over the next two weeks.

finally in german you have now the cabinet not discussing crucial elements of that plan and therefore, again, it is delayed and cannot go before the german parliament. so the whole timetable for bailing out greece and the efsf is beginning to slip. the greatest irony of all of this is it was created so europe could stand shoulder to shoulder as importantly as america. and now we see obama is going to call them all in to try to bang heads together. the americans trying to get the europeans to sort out this mess. this mess is worse now than it was 12 hours ago, frankly. interesting. 
"Events in the past may be roughly divided into those which probably never happened and those which do not matter." --William Ralph Inge

"sometimes someone confesses a sin in order to take credit for it." -- John Von Neumann

Faust

Wow, european finance minsters are dicks...
Sleepless nights at the chateau

Doktor Howl

Quote from: Faust on September 16, 2011, 07:20:21 PM
Wow, european finance minsters are dicks...

Yeah, maybe.  But anyone who takes advice from Geithner is an idiot.
Molon Lube

Faust

Quote from: Doktor Howl on September 16, 2011, 07:24:33 PM
Quote from: Faust on September 16, 2011, 07:20:21 PM
Wow, european finance minsters are dicks...

Yeah, maybe.  But anyone who takes advice from Geithner is an idiot.

Maybe, but most of them aren't much better. Their policy of trying to fill the money black hole with endless bailouts is reaching its expected conclusion with Italy.
Sleepless nights at the chateau