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  #41  
Old 06.01.2008, 16:16
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Kind of sad that the board of directors still have their jobs.

Up to me I would sack the lot without golden parachutes after the dust has settled after this episode, which I guarantee is not over yet.

How can it be that a board loses so much, only to keep their job?????

Personally I find that disgusting.
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  #42  
Old 06.01.2008, 16:18
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Why everybody is complaining about ubs and other banks instead of looking at the US system of lending money?
If I have to blame someone, I would blame the guys who lent money to anyone.
In which case why has UBS been shored up to the tune so far of min. 10bn,
and from outside Switzerland also.
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  #43  
Old 06.01.2008, 16:24
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Why everybody is complaining about ubs and other banks instead of looking at the US system of lending money?
If I have to blame someone, I would blame the guys who lent money to anyone.
Well firstly, securitization of debt and various other wonderful 'financial instruments' were tools used extensively by all our Western banks and were specifically invented to get around the inconvenient need to have sufficient funds to adequately cover loans and the risk of default.

Secondly, one would expect those banks engaged in buying CDOs and suchlike to carry out proper financial risk assessment and realistically assess their worth instead of 'marking to model' where the model was designed by some other financial barrow-boy done good. I know if someone told me I could buy a AAA rated bond that would deliver me 10% or more interest per annum when central bank rates were at 2-3% I would certainly ask myself "What is going on here". There were plenty of questions floating around about the safety of this process long before the credit crunch hit.

Thirdly, anyone with half a brain cell could see that all this reckless lending was going to end in disaster. Exposing yourself to it through buying debt related bonds was always a dumb, dumb idea. But I guess it made the hedge fund managers and investment bankers look like financial genii while it lasted. I'm sure it certainly made a lot of those wnakers even richer. Now, the rest of us have to foot the bill for their mess.
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  #44  
Old 06.01.2008, 16:48
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Exactly Gav, just greed, and everyone else has to pick up the pieces of LOUSY managers, who are not fit to have the position they hold. Yet whilst there have been job losses, do we think for a minute that these "top brainy managers" get their just rewards? No instead of instant dismissal they get bonuses and a pat on the back for doing crap business.

Disgusting is the word for it.

There is a ray of hope though. There are disgruntled shareholder groups, this is the only way such banks will be brought to heel, unless of course the unthinkable happens and they go Nothern Rock style .......

New board, clean up the investment side and have much more control of what the management actually gets up.
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  #45  
Old 06.01.2008, 16:53
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Thank for your replies.
I was just wondering why it's so easy to do that in US while here in .ch you can't get a loan if you don't have at least 10-20% of the money.

BTW I heard that we will see something similar again in Italy too.
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  #46  
Old 06.01.2008, 17:19
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Thank for your replies.
I was just wondering why it's so easy to do that in US while here in .ch you can't get a loan if you don't have at least 10-20% of the money.

BTW I heard that we will see something similar again in Italy too.
If it's any consolation, the laxity displayed by US lenders was also seen in many parts of Europe too. Britain and Ireland are two big examples - banks have been giving out loans, overdrafts, credit cards and especially mortgages like money was growing on trees for the last 4-5 years.

eg. Northern Rock were openly prepared to lend more than 5x joint salary and were also offering 125% LTV mortgages (ie. They loan you 25% more than it takes to buy the house) for a 5% deposit - which punters were often raising from their multiple credit cards.


I must say that the seemingly tough criteria shown by Swiss banks in lending to their Swiss customers seems admirable - but when you learn that they were punting billions of Francs themselves on the most shaky loans from the US and other parts of the world you have to draw the conclusion that they are a load of hypocritical b'stards.

If the world was fair they would be punished severely but reality dictates that those at the top are very well protected. You only have to look at the (up to) $250m 'Golden Parachute' which the boss who led Merrill Lynch to ruinous losses got....

http://www.bloggingstocks.com/2007/1...or-his-failur/
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  #47  
Old 09.01.2008, 17:24
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Re: Yet more sub-prime UBS woes another $10bn writedown....

The Belgravia Despatch

Quote:
When you add it all up, according to Das' research, a single dollar of "real" capital supports $20 to $30 of loans. This spiral of borrowing on an increasingly thin base of real assets, writ large and in nearly infinite variety, ultimately created a world in which derivatives outstanding earlier this year stood at $485 trillion -- or eight times total global gross domestic product of $60 trillion.
I also particularly like the NINJA mortgage : No Income, No Job, No Assets

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  #48  
Old 09.01.2008, 19:07
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Did you see the news that UBS are now accused of overstating volume trades in shares? http://www.bloomberg.com/apps/news?p...efer=worldwide

Amazing what scandals UBS is seemingly getting itself immersed in. I personally wonder what would happen if a few 10.000's of Swiss would decide they had enough and switch banks. Would that have an impact? This more or less happened to ABN-Amro and the rumour mill about this did quite a lot of damage to the 'brand' strength. So I wonder how immune UBS would be to such an event these days?
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  #49  
Old 09.01.2008, 20:03
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Did you see the news that UBS are now accused of overstating volume trades in shares? http://www.bloomberg.com/apps/news?p...efer=worldwide

Amazing what scandals UBS is seemingly getting itself immersed in. I personally wonder what would happen if a few 10.000's of Swiss would decide they had enough and switch banks. Would that have an impact? This more or less happened to ABN-Amro and the rumour mill about this did quite a lot of damage to the 'brand' strength. So I wonder how immune UBS would be to such an event these days?
UBS lurch from on crisis to another, if you look at their wikipedia entry...
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  #50  
Old 09.01.2008, 20:17
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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The Belgravia Despatch


I also particularly like the NINJA mortgage : No Income, No Job, No Assets

The multiplying of savings to then loan out is a cornerstone of how things work.
The BASEL accords decree how much capital they must keep (eg CS and UBS around 12%, citibank around 7.5%)

One things I think I understand about these CDO thingies (thanks to the Economist);
- the banks kept the best ones for themselves
- the banks sold the "riskier" ones
- the banks *lent* money to other institutions to buy the riskier ones

When confidence dried up (eg the fear of defaults on NINJA mortages etc), they collectively shat themselves and realised that they need to keep their money just in case, hence the "credit crunch".
Then:
- higher risk of this loan defaulting
- the "better" CDOs are dragged down

UBS, love or hate them, moved to draw a line underneath it and restore their capital base.

Of course, I could be completely wrong
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  #51  
Old 09.01.2008, 20:23
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Re: Yet more sub-prime UBS woes another $10bn writedown....

UBS has only just twigged onto the fact that there are transaction costs that they don't factor into certain figures. Like trades which appear "free" but of course are not.

One Bank? Only by name
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  #52  
Old 11.01.2008, 00:08
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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The multiplying of savings to then loan out is a cornerstone of how things work.
The BASEL accords decree how much capital they must keep (eg CS and UBS around 12%, citibank around 7.5%)

One things I think I understand about these CDO thingies (thanks to the Economist);
- the banks kept the best ones for themselves
- the banks sold the "riskier" ones
- the banks *lent* money to other institutions to buy the riskier ones

When confidence dried up (eg the fear of defaults on NINJA mortages etc), they collectively shat themselves and realised that they need to keep their money just in case, hence the "credit crunch".
Then:
- higher risk of this loan defaulting
- the "better" CDOs are dragged down

UBS, love or hate them, moved to draw a line underneath it and restore their capital base.

Of course, I could be completely wrong
The whole idea behind CDOs and other asset backed securities was to get the lending off of the balance sheet so that they could effectively loan more and more, making greater and greater profits* free of those annoying financial regulations about how much they could lend out....

Looks like many of the most conservative and upright institutions were more than happy to indulge in trading these things. You have to ask just how competent they are.


* So long as the secured asset keeps rising and rising in price and the borrowers don't start to default. No danger of that happening though
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  #53  
Old 11.01.2008, 16:51
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Re: Yet more sub-prime UBS woes another $10bn writedown....

Lordy ...

Merrill Lynch to Take $15 Billion Writedown

double its original forecast ... am I just being cynical or have they really not been able to put batteries in the calculators ..
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  #54  
Old 11.01.2008, 16:57
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Re: Yet more sub-prime UBS woes another $10bn writedown....

No you ain't be cynical.

This is getting boring, all these so-called expert money managers, and what do they do, more mess than a pig at a trough, and of course then they want the Governments to help them out. This will rumble onwards until some major bank collapses. No managers will get the push or jail or have their bonuses cut. People will lose their jobs yes, but not the useless at the top.

Its a sick joke on the middle and lower classes what is going on.
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Old 11.01.2008, 16:59
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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Lordy ...

Merrill Lynch to Take $15 Billion Writedown

double its original forecast ... am I just being cynical or have they really not been able to put batteries in the calculators ..
All part of the strategy - cover up as much of your loss as possible and trickle out the bad news over several quarters, as necessity dictates.

If the markets were to get wind of the full losses of our erstwhile financial institutions, there would be a meltdown. Of course people suspect the extent of the losses but human nature dictates that if we can't see 'something' that we don't like, we will pretend that it doesn't exist/need to be dealt with.
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Old 11.01.2008, 17:02
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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All part of the strategy - cover up as much of your loss as possible and trickle out the bad news over several quarters, as necessity dictates.

If the markets were to get wind of the full losses of our erstwhile financial institutions, there would be a meltdown. Of course people suspect the extent of the losses but human nature dictates that if we can't see 'something' that we don't like, we will pretend that it doesn't exist/need to be dealt with.
the Arabs & Chinese sovereign funds are going to have another field day ....
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  #57  
Old 11.01.2008, 17:04
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Re: Yet more sub-prime UBS woes another $10bn writedown....

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If the world was fair they would be punished severely but reality dictates that those at the top are very well protected. You only have to look at the (up to) $250m 'Golden Parachute' which the boss who led Merrill Lynch to ruinous losses got....
How does one get one of these jobs, where ruinous failure is so handsomely rewarded, I will apply, lets face it with a record like these guys have, I would have to be f. useless not to succeed!!!!!!!!!!
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  #58  
Old 11.01.2008, 17:10
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Re: Yet more sub-prime UBS woes another $10bn writedown....

The investment banks are greedy, but they aren't stupid. The problem with getting a handle on write-downs is due to the difficulty in determining the value of their vast and complex portfolio some of which is fast declining in value. The securitization of these assets mean that they have to figure out what piece of some asset they hold and how much it has declined in value. It's vast and nightmarish and even they won't know the full outcome until well into 2008 and house prices in the US stop falling. All they can do now is determine the value of what they have already found.
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Old 11.01.2008, 17:19
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Re: Yet more sub-prime UBS woes another $10bn writedown....

In other words, it is so complex, as to be doomed to failure and they deserve all they get, because none of the managers have a hope in hell of knowing what is going on in the business they are running, and of course they mainly do not own the company or the money, so they arrogantly think they can do what they like and always win. Very sad.
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Old 11.01.2008, 17:25
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Re: Yet more sub-prime UBS woes another $10bn writedown....

I think the greedy ex-chiefs of companies such as Citigroup, Merrill Lynch etc should hand back their severance pay. They were the ones who are really responsible for the greed that has become the international financial system.....
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