111–120 of 140 posts
I don't understand why this stuff isn't front page news of mainstream (cnn, fox news, etc.) newspapers. You'd figure with all the lingering resentment this would be a huge field day. Currently relegated to business news journals.
It's very big news in the UK.
Earlier quoted context omitted.
> if you have a LIBOR-linked mortgage with Barclays, They all did it. Barclays were the last bank to start doing it, and the first to confess.
So far, only Barclays, Citigroup, RBS, UBS AG, ICAP, Lloydsand Deutsche Bank are being investiagted. http://www.businessweek.com/news/2012-07-09/libor-criminal-p...
We don't have proof that "they all did it" so perhaps I overstated the case a little. We do know that the UK government contacted Barclays because their rates were higher than everyone else's. Perhaps some of those lower rates were legitimate. Perhaps not.
But if we're going to be pedantically accurate, perhaps you should say "if you have a LIBOR-linked mortgage with Barclays, Citigroup, RBS, UBS AG, ICAP, Lloyds or Deutsche Bank" ....
Earlier quoted context omitted.
So far, only Barclays, Citigroup, RBS, UBS AG, ICAP, Lloydsand Deutsche Bank are being investiagted. http://www.businessweek.com/news/2012-07-09/libor-criminal-p...
I don't think there's a contradiction between "they all did it" and "so far, only many of the big banks are being investigated". We don't have proof that "they all did it" so perhaps I overstated the case a little. We do know that the UK government contacted Barclays because their rates were higher than everyone else's. Perhaps some of those lower rates were legitimate. Perhaps not. But if we're going to be pedantica…
Earlier quoted context omitted.
So far, only Barclays, Citigroup, RBS, UBS AG, ICAP, Lloydsand Deutsche Bank are being investiagted. http://www.businessweek.com/news/2012-07-09/libor-criminal-p...
I don't think there's a contradiction between "they all did it" and "so far, only many of the big banks are being investigated". We don't have proof that "they all did it" so perhaps I overstated the case a little. We do know that the UK government contacted Barclays because their rates were higher than everyone else's. Perhaps some of those lower rates were legitimate. Perhaps not. But if we're going to be pedantica…
The involvement of Barclays has been widely reported, so you could (maybe) demand adequate assurance without being dishonourable.
Earlier quoted context omitted.
This is one of those questions where a rebuttal and an explanation would be extremely long, and would also have to work against your biases/beliefs. I hope someone more eloquent than me comes along. In short it's a complicated matter, with tough constraints. For one, yes banks do concentrate wealth a lot more than Facebook and google. HFT/prop desks/Cdo desks and the firms PE and IB arms are extremely well paid. They…
Full disclosure: I worked on a Magnetar trade; not the one that was in the press, but another deal basically identical. And I bought, sold and analyzed Abacus. All of these transactions are explicitly caveat emptor. My grandma couldn't go out and buy a piece of ABACUS 2007-ACA; sales are restricted to "qualified investors". Of course we all know that's basically meaningless, at least the assumption that "qualified in…
But at some point, does a product like this become such a toxic POS that it is obvious it shouldn't be in the market? We don't let people create and market, for instance, a phone that happens to explode on contact with air. We don't allow cars that, say, don't have brakes. Should there be some regulatory structure in place that looks at new offerings like this and a least provides an opinion to the validity of the product? Now, naturally, this would be very difficult - both because the SEC and CFTC both suffer from lack of funding, not being staffed by appropriate experts and being (depending on how you view it) captured. But it just strikes me that these things should never have been allowed on the market in the first place - especially given, as you rightly point out, that most buyers are not going to have the ability to actually perform the appropriate level of due-diligence.
And while you're right that grandma can't go out and buy Abacus, her pension fund could, and therefore it does effect her.
I do love the idea of comparing GS to a local car dealer - but I can't remember another business I've ever seen that is so willing to throw their own customers/clients under the bus to make a buck. So I'd actually put them below the local car dealer. :)
Earlier quoted context omitted.
I don't think there's a contradiction between "they all did it" and "so far, only many of the big banks are being investigated". We don't have proof that "they all did it" so perhaps I overstated the case a little. We do know that the UK government contacted Barclays because their rates were higher than everyone else's. Perhaps some of those lower rates were legitimate. Perhaps not. But if we're going to be pedantica…
A little touchy, aren't we? The involvement of Barclays has been widely reported, so you could (maybe) demand adequate assurance without being dishonourable.
I really don't know what you're trying to imply.
But actually I'd say I'm being pedantic at most. Because factual accuracy matters.
Earlier quoted context omitted.
Well said. I'm an ex-quant, and one thing that is supremely irritating about discussions of Abacus is the inability of people to distinguish between acting as a fiduciary and acting as a market maker. When a counterparty calls GS up for a quote on the JPY/USD cross, they don't care one iota what GS's internal positioning is, or where GS thinks the JPY/USD will be in 3mths time, or any other number of things. These ar…
The OP did point out that even the "qualified investors" had no clue what they were doing. Just to make sure we both read it the same way. Also, and correct me If I am wrong - you've moved to discussing a quote from GS for a product (JPY/USD cross to be specific), and not CDOs in particular. This is in order to point out that: GS has no fiduciary duties to the buyer This point is reiterated in your last line as well…
There's no significant distinction (IMO) between a trade on a 3m butterfly on the JPY/USD vs. a the 3%-7% tranche of Abacus - both are derivative transactions with well-defined risk/rewards, and you do your own research and come to your own conclusions on the value of the product. Sure, one is more liquid, more transparent, etc. but that's a factor to be taken into account when buying, not a reason for complaining when MTM moves against you.
> We need to rethink as a society what banks are for, what exchanges are for, and what clearing houses are for. If they are for the profit of the few at the expense of the many now, that is because it is the business model we have permitted. Is that really true compared to Silicon Valley? Do banks concentrate wealth a lot more than a Google or a Facebook? If not, how would you feel about some random dude commenting o…
There's little to no comparison b/t the Silicon Valley model and current banking system model. In the banking system, risk is systemic, in the Silicon Valley model, risk is localized. The two models are the inverse of each other. In SV, many relatively small investments are spread over lots of startups, with the expectation that something like ~90% will fail, ~9% will just break even, 0.99% will do well, and 0.01% wi…
What, other than scale, is different when you look at the collapse of a single company? Think of the havoc that would be caused if Amazon or Google disappeared.
Earlier quoted context omitted.
What deregulation? The financial industry is the most heavily regulated industry save medicine. The problem is there are too many regulations - banking regulations are so complex only the bankers understand them, which is the basis of the revolving door between banks and government regulating agencies. Too much regulation gives companies as much freedom as too little.
Since you are getting downvoted, a quick point - the reduction of regulations was what helped create the crisis - removal of glass steagal in 1999 in particular.
Earlier quoted context omitted.
Full disclosure: I worked on a Magnetar trade; not the one that was in the press, but another deal basically identical. And I bought, sold and analyzed Abacus. All of these transactions are explicitly caveat emptor. My grandma couldn't go out and buy a piece of ABACUS 2007-ACA; sales are restricted to "qualified investors". Of course we all know that's basically meaningless, at least the assumption that "qualified in…
For the most part I completely agree with your analysis here - really well done. But at some point, does a product like this become such a toxic POS that it is obvious it shouldn't be in the market? We don't let people create and market, for instance, a phone that happens to explode on contact with air. We don't allow cars that, say, don't have brakes. Should there be some regulatory structure in place that looks at…
There are few things that you can't sell with proper warning labels. And even these toxic packages of bad loans had some value. They didn't pay out anywhere near expectations but they paid out something.