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  #181  
Old 03.02.2008, 11:15
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Re: Yet more sub-prime UBS woes another $10bn writedown....

... should anyone have the feeling that the worst is behind us

S&P last week downgraded some 8,000 mortgage backed securities, worth about $$ 560 BILLION

there is doubtless more where that came from ...
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  #182  
Old 03.02.2008, 12:04
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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... should anyone have the feeling that the worst is behind us

S&P last week downgraded some 8,000 mortgage backed securities, worth about $$ 560 BILLION

there is doubtless more where that came from ...
Can you quote a source for this info?

Downgrade does not mean written-off
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  #183  
Old 03.02.2008, 14:12
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Can you quote a source for this info?

Downgrade does not mean written-off
sure... FT Friday, 01 Feb, page 7, headline "Last year's model"

of course downgrade does not mean written-off ... but that means, after all the billions of dollars written off, there are yet more securities losing value

once a security is downgraded, several holders are forced to recognize the reduction in their value .. i.e. further writedowns ahead

in fact certain structures are obliged legally to only hold securities rated, for example, AA or higher. so each round of such downgrades forces some funds to sell off all their holding... which obviously leads to further falls in their price.

and oooops.. the value was 534 billion, not 560. but hey whats a billion here and a billion there ..?

Last edited by dino; 03.02.2008 at 14:14. Reason: fixed the billions
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  #184  
Old 03.02.2008, 14:38
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Can you quote a source for this info?

Downgrade does not mean written-off
duh.. should have looked online first rather than reach for the paper by the bedside.. here's a linky

very interesting that the economists are wondering why Americans are handing in the keys to their houses, and holding on to their cars and credit cards ...

here's why Ben

a) most of them have little or no equity in the house
b) the more people default, the less stigma there is to defaulting
c) with so many vacant homes, renting is a no brainer in most areas now
d) they have equity in the car... and anyway.. they need their car to get to work (duh)
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  #185  
Old 03.02.2008, 21:04
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Re: Yet more sub-prime UBS woes another $10bn writedown....

And yesterday, BBC radio was full of the news that Egg had put 160,000 people on their bad credit card list. The message was clear - 35 days to pay up or find the card stopped.

3 questions here:

Is this an attempt to raise cash?

If so, since when was the BBC allowed to advertise for a commercial company?

How many of those 160,000 will simply go up to their maximum limit before the card stops working?

(Sorry, not an Egg customer, but I am concerned that they may have encouraged people to borrow more than they can afford to repay)
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  #186  
Old 03.02.2008, 21:22
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Not sure that '35 days to pay up' is right. 161,000 customers have been told their card will stop working (for purchases) in 35 days' time, regardless of their actions from now on. They will still have to pay off their balances in the normal way, be it immediately or over several years. So if they max out the card before D-Day they will still have to pay it back.

There is a lot of kerfuffle because Egg (owned by Citigroup) have cut off many people with a good credit record - clearly they are not profitable enough, so have been given the boot. I'm not justifying this in any way, it's not exactly great customer service, after all.

BBC talk about all sorts of things, this isn't advertising? Unless you subscribe to the notion that any advertising is good advertising.

http://news.bbc.co.uk/1/hi/business/7224268.stm
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  #187  
Old 03.02.2008, 23:47
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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There is a lot of kerfuffle because Egg (owned by Citigroup) have cut off many people with a good credit record - clearly they are not profitable enough, so have been given the boot. I'm not justifying this in any way, it's not exactly great customer service, after all.

That's at the core of the fuss that's been kicked up.

Egg, now owned by Citi who have the largest subprime losses of any of the banks (that we know of ) appear to be clearing out responsible, prudent users who regularly pay in full but keeping people who run large outstanding balances.

They have justified their actions by saying they are getting rid of bad credit risks ie Sub prime borrowers. However it seems to me that they are compounding one huge mistake with another. In order to raise cash fast, they want to maximise the profits they make by concentrating on feckless and imprudent clients whom they can milk for interest payments but they risk losing a lot of money should things go bad in the economy and these fiscal incompetents default.

For example, if recession bites and people have to default on debts they'll certainly do so on unsecured debt first because in the UK you can't just hand the keys of the house back to the bank if you can't make payments like you can in many parts of the US.
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  #188  
Old 03.02.2008, 23:51
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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duh.. should have looked online first rather than reach for the paper by the bedside.. here's a linky

very interesting that the economists are wondering why Americans are handing in the keys to their houses, and holding on to their cars and credit cards ...

here's why Ben

a) most of them have little or no equity in the house
b) the more people default, the less stigma there is to defaulting
c) with so many vacant homes, renting is a no brainer in most areas now
d) they have equity in the car... and anyway.. they need their car to get to work (duh)
Yep, if I were pushed hard for cash and I saw my house repayments rocketing whilst at the same time the value of my property plumeting into negative equity and I could simply hand the keys to the mortgage lender to clear my debt, I would most certainly do so provided that I could rent for less than the monthly mortgage repayments.

Not really an option in Europe though. I also suspect that we'll see laws changed in the States at some stage to suit the banks better.
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  #189  
Old 04.02.2008, 22:51
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Yep, if I were pushed hard for cash and I saw my house repayments rocketing whilst at the same time the value of my property plumeting into negative equity and I could simply hand the keys to the mortgage lender to clear my debt, I would most certainly do so provided that I could rent for less than the monthly mortgage repayments.

Not really an option in Europe though. I also suspect that we'll see laws changed in the States at some stage to suit the banks better.
Going back to the early 1990s, my insurance chap had a customer who was trying to escape from negative equity but couldn't. His plan was to sell the house for the best price he could get and then take out a personal loan for the shortfall, but apparently the UK conveyancing system doesn't make this easy, as in order to transfer the property the solicitor has to sign that the mortgage has been cleared in full. It's probably a bit more complicated than that, IANAL etc., but you can see where people get trapped.
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  #190  
Old 05.02.2008, 12:33
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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very interesting that the economists are wondering why Americans are handing in the keys to their houses, and holding on to their cars and credit cards ...

here's why Ben

a) most of them have little or no equity in the house
b) the more people default, the less stigma there is to defaulting
c) with so many vacant homes, renting is a no brainer in most areas now
d) they have equity in the car... and anyway.. they need their car to get to work (duh)
Someone wrote in to FT letters today to explain this mysterious phenomenon, and I just had to share it with you all ....

he says ... "You can sleep in your car, but you can't drive your living room"

are you listening Mr. Bernanke ??
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  #191  
Old 06.02.2008, 13:08
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Apparently, the European Central Bank and Bank of England will shortly decide on interest rate levels, it is interesting to see what they will do, follow Bernanke and try a rate cut to stimulate the economy, or stay put perhaps?

I read the markets are already factoring in a rate cut, but perhaps that is being optimistic? Also, the Deutsche Bank will present earnings tomorrow morning, that is one to watch as well isn't it, as Swiss and European bank shares might be affected too by the direction?
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  #192  
Old 06.02.2008, 13:51
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Apparently, the European Central Bank and Bank of England will shortly decide on interest rate levels, it is interesting to see what they will do, follow Bernanke and try a rate cut to stimulate the economy, or stay put perhaps?

I read the markets are already factoring in a rate cut, but perhaps that is being optimistic? Also, the Deutsche Bank will present earnings tomorrow morning, that is one to watch as well isn't it, as Swiss and European bank shares might be affected too by the direction?

Deutsche Bank May Miss Target After Dodging Subprime

looks as though they are going to miss their guidance by 10-13%, which will inevitably pull down financial stocks (further)
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  #193  
Old 06.02.2008, 14:25
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Re: Yet more sub-prime UBS woes another $10bn writedown....

and back to UBS .... New blow to UBS as India licence bid put on hold

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the central bank had withheld the approval because of UBS' "reluctance to cooperate" with an investigation into alleged money transfers between an Indian businessman and a Saudi arms dealer.
nice clean hands then
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  #194  
Old 06.02.2008, 17:50
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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and back to UBS .... New blow to UBS as India licence bid put on hold



nice clean hands then
UBS has had a bit of a history in India.. back in 2004, it was also barred by SEBI (the stock market regulator) for a year from issuing or rolling over any offshore derivative instruments ... the Swiss are apparently not so finicky about following other people's rules
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  #195  
Old 07.02.2008, 10:35
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Unlike the UK, it seems that there is no deposit guarantee scheme in Switzerland, so little benefit there.

You minimise the scale of the potential loss should a bank holding your cash go bust - but you multiply the chance that you will be the victim of some bank going bust.

I would think it very, very unlikely indeed that a big bank like UBS or CS would become insolvent. If they did it would be in a 'financial apocalypse' scenario whereby it's The End Of The World As We Know It; In which case you'd be better investing your cash in guns & ammo, canned food, whiskey & cigarettes and a defensible habitation with a water source.
Please read the below links . What are your comments/feedback on this.

http://swissquote.ch/sq_mi/market/ne...CE&short=false

http://www.reuters.com/article/rbssF...64375920080207
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  #196  
Old 07.02.2008, 11:30
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Bluff? Imagine how much confidence would be lost in the Swiss economy if UBS did go bust? The mantra for so many years has been stability stability stability and though not always true it sure is attractive to investors.

Anyone have figures showing the relevance of UBS to the Swiss economy?
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  #197  
Old 07.02.2008, 12:59
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Deutsche Bank May Miss Target After Dodging Subprime

looks as though they are going to miss their guidance by 10-13%, which will inevitably pull down financial stocks (further)
an update :

Deutsche Bank profits fall 47%

Quote:
Although net income was down to 0.97 billion (0.73 billion) compared to 1.8 billion (1.34 billion), the Frankfurt-based investment will writedown less than other firms in subprime losses resulting from the US mortgage collapse.
Quote:
He continued to say that net markdown was less than 50 million (37.29 million) for the fourth quarter, stemming mostly from leveraged finance markets.
shares are up nearly 3% as investors blow a large sigh of relief.
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  #198  
Old 07.02.2008, 15:18
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Bluff? Imagine how much confidence would be lost in the Swiss economy if UBS did go bust? The mantra for so many years has been stability stability stability and though not always true it sure is attractive to investors.

Anyone have figures showing the relevance of UBS to the Swiss economy?
you can compare their annual revenues to the national GDP and such, but no numbers will tell you this story. UBS (or CS) going under would be detrimental to the Swiss brand like nothing else before it. Forget Swissair, that was a non-event ...

On the other hand, that is not really likely today (unless they reveal truly monstrous further losses next week, which would change the game). Finally, if it ever does come to that, you can bet your last bar of Toblerone that the Swiss government will organize a bail out with your taxes and mine, irrespective what has been said on the subject. They simply cannot afford not to ...
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  #199  
Old 07.02.2008, 17:01
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Northern Rock to appear on public accounts - up to 100 billion added to the UK's national debt.
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  #200  
Old 07.02.2008, 18:56
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Bluff? Imagine how much confidence would be lost in the Swiss economy if UBS did go bust? The mantra for so many years has been stability stability stability and though not always true it sure is attractive to investors.

Anyone have figures showing the relevance of UBS to the Swiss economy?

It's sort of refreshing to hear that the Swiss government won't do a UK-style 'Northern Rock' on UBS ... but as someone who has left the country but has savings with them it's somewhat scary....

However, as you say I don't think that the Swiss govt can afford to see a major Swiss bank go belly-up so I have no doubt that all sorts of help is being given behind the scenes. Switzerland absolutely depends on the image of safety and stability in its banking system. Having a figurehead get seriously in trouble would shatter confidence and threaten the entire banking sector.
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