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Old 09.10.2008, 08:59
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Re: How Safe is UBS

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Never really understood how these small rate changes can effect anything. Always seemed to me akin to a witch doctor throwing chicken bones over their shoulder. More of a religion based belief than actually measurably impacting real life
The "man in the street" seems to be happy to pay 15/20% interest on credit card debts & these rate changes never seem to have a leverage effect on the credit card interest rates; I mean a 0.5% rate cut should translate into a 4 or 5% cut in credit card interest rates.

For example SNB cut their rate today but nobody else (like mortgage or credit card companies or loan companies) has announced any cuts; they just put the difference in their pockets. How does this help?

Marton
You are right. The "man in the street" does not benefit. That man should pay more taxes so that the big private financial institutions can be supported.

These wholesale rate changes only benefit the large institutions. They can borrow money cheaper from the National Bank. They could pass the benefits to the retail borrower. Most probably they prefer to use the cheaper funds for other more lucrative purposes.
  #382  
Old 09.10.2008, 09:45
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Re: How Safe is UBS

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You are right. The "man in the street" does not benefit. That man should pay more taxes so that the big private financial institutions can be supported.

These wholesale rate changes only benefit the large institutions. They can borrow money cheaper from the National Bank. They could pass the benefits to the retail borrower. Most probably they prefer to use the cheaper funds for other more lucrative purposes.
So how do these rate changes stimulate the economy; the owners of large institutions (like UBS - must stay on topic) just buy more cigars - it does not make them safer?

Marton
  #383  
Old 09.10.2008, 09:48
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Re: How Safe is UBS

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So how do these rate changes stimulate the economy; the owners of large institutions (like UBS - must stay on topic) just buy more cigars - it does not make them safer?

Marton
I'll tell you that if you tell me which banks negotiate cash deposit rates for over a million.
  #384  
Old 09.10.2008, 09:58
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Re: How Safe is UBS

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So how do these rate changes stimulate the economy; the owners of large institutions (like UBS - must stay on topic) just buy more cigars - it does not make them safer?

Marton
A lower risk free rate means that all stocks suddenly look cheaper because valuations go up. Less demand for treasuries and more demand for stocks.
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Old 09.10.2008, 16:22
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Re: How Safe is UBS

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I'll tell you that if you tell me which banks negotiate cash deposit rates for over a million.
Ha ha; I was going to point you at Coutts-Baldwin in Eglisau but it seems they have closed their doors - some misunderstanding about rental payments.

Marton
  #386  
Old 09.10.2008, 17:08
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Re: How Safe is UBS

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This is an original excerpt from an e-mail circulated in a large CEE bank today....

"Valid from Monday, the 13th of October, please cancel all your business trips and trainings you have planned until the year end.
The reason for this step is the actual situation, which leads to the necessary cost cutting. The cost reduction initiative was discussed in the Holding Board Meetings.
In case your business trips or trainings have to take place necessarily, please discuss the matter with XXXX and we will consider it individually.

Thank you for your understanding!"

This reminds me very much of 2001....
It remains me of stupid short-sighted management. Unless these "business trips" and "trainings" (sic) are euphemisms for 'jollies' and 'bun fights', this is the last thing a business should be doing.

When we consider the amounts of money passing down the drain hourly in this crisis, what difference will it make by have less trained staff and salesmen sitting in the office?? Will this move improve things? Unless they are going to fire the lot...
  #387  
Old 09.10.2008, 18:16
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Re: How Safe is UBS

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So how do these rate changes stimulate the economy; the owners of large institutions (like UBS - must stay on topic) just buy more cigars - it does not make them safer?

Marton
The intention is not to make UBS or other bank safer. The intention is to encourage the banks to lend money to businesses.

The prevalent credit crunch means that banks are very hesitant to lend. Consequently, businesses cannot invest, finance projects, etc. So the economy would stagnate because money -- the lifeblood -- is not flowing. That is the theory.

In practice, banks might have other lucrative ideas, e.g. speculating on oil prices or some other wonderful idea.
  #388  
Old 10.10.2008, 13:47
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Re: How Safe is UBS

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Maximum CHF 30k per depositor (can be single person or several, e.g. husband nd wife) per Bank. But note that the pool only has 4B. That is insufficient if several smaller banks or a big bank collapse. Hence, worried persons should deposit in the state guaranteed institutions.
FT today
"Reykjavik’s decision to default on the compensation it owes to foreign investors shows that, despite assurances by national governments, there is no such thing as a cast-iron guarantee.
Iceland’s failure to honour its obligations to overseas depositors is an extraordinary event. But, as long as the global financial crisis has further to run, there is no reason to think it will be unique."

Well written analysis; conclusion is - spread your money around several banks (keeping well within guarantee limits), gold bars, etc.
Exactly what you do with your money if you are a big business or other with millions or billions to keep safe is rather more difficult.

Marton
  #389  
Old 10.10.2008, 13:54
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Re: How Safe is UBS

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FT today
"Reykjavik’s decision to default on the compensation it owes to foreign investors shows that, despite assurances by national governments, there is no such thing as a cast-iron guarantee.
Iceland’s failure to honour its obligations to overseas depositors is an extraordinary event. But, as long as the global financial crisis has further to run, there is no reason to think it will be unique."

Well written analysis; conclusion is - spread your money around several banks (keeping well within guarantee limits), gold bars, etc.
Exactly what you do with your money if you are a big business or other with millions or billions to keep safe is rather more difficult.

Marton
I agree as well. There are no guarantees in life apart from death. Looks like I will have to further split my money that I freshly moved to ZKB. Will be hard keeping track of all the cards.
  #390  
Old 10.10.2008, 14:01
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Re: How Safe is UBS

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The intention is not to make UBS or other bank safer. The intention is to encourage the banks to lend money to businesses.
The Libor rate for three-month interbank dollar loans rose by 0.3 per cent to 4.8 per cent today & the Swiss franc one (on which many Swiss mortgages are based) by 0.1 to 3.1 at this moment.

I hope somebody has better idea to get the economy moving.

Marton
  #391  
Old 10.10.2008, 14:04
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Re: How Safe is UBS

Part of the unrest today is fear about the Lehman settlements that are due today, if I understand things correctly. Anyone know how much UBS is into Lehman? Is there added risk in that sense to UBS today?

Last edited by muze7; 10.10.2008 at 17:36.
  #392  
Old 10.10.2008, 14:25
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Re: How Safe is UBS

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FT today
"Reykjavik’s decision to default on the compensation it owes to foreign investors shows that, despite assurances by national governments, there is no such thing as a cast-iron guarantee. Marton
Well some national governments. To be fair, I think there's a difference between the government of a country of 300 thousand people and a country of 300 million people. At least that's what the strength of the USD and the yields on US treasury bonds are telling you.
  #393  
Old 10.10.2008, 15:56
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Re: How Safe is UBS

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Part of the unrest today is fear about the Lehman settlements that are due today, if I understand things correctly. Anyone know how much UBS is into Lehman? Is there added risk in that sense to UBS today?
Ah yes; another CDS settlement time.
I suppose UBS has their fair share of these; we should have a more informed view of the impact on UBS by the end of today (end of the US business day that is).

Marton
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Old 10.10.2008, 17:37
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Re: How Safe is UBS

Forgot to say, I am asking about the redemptions because if the ... hits the fan regarding Swiss banks, it might be THE DAY today to change your francs into various currencies. I noticed too that for the first time in the past few weeks, the panic buying has switched from buying Yen to CHF again. (The rate of JPY/CHF dropped, whereas it has had a steep climb recently).

Edit: yes I know it is related to the carry trade unwinding, so for example the Australian dollar has lost about 25% against the Franc (and probably the Yen). Presumably, the Yen has increased against the Franc because of the carry trade unwind as well.

But what struck me is that today, that situation has reversed! The franc is gaining against the YEN, on a day where I cannot imagine the carry trade picking up again...


So safe haven buying has mightly accelerated today, but the CHF gain might be shortlived if UBS drops a news bombshell. Edit, sorry I should Credit Suisse here perhaps. Thanks Bananahead.

Last edited by muze7; 10.10.2008 at 21:29.
  #395  
Old 10.10.2008, 17:47
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Re: How Safe is UBS

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Forgot to say, I am asking about the redemptions because if the ... hits the fan re:UBS, it might be THE DAY today to change your francs into various currencies. I noticed too that for the first time in the past few weeks, the panic buying has switched from buying Yen to CHF again. (The rate of JPY/CHF dropped, whereas it has had a steep climb recently).

So safe haven buying has mightly accelerated today, but the CHF gain might be shortlived if UBS drops a news bombshell!
The Yen rate has nothing to do with panic and everything to do with deleveraging and closing down of carry trades, but never mind. Nothing quite like scaremongering is it...
  #396  
Old 10.10.2008, 18:17
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Re: How Safe is UBS

hi Muze, the end result's not in, but early indications for the Lehman debt auction is a recovery rate of 9.75 cents on the dollar.
However, UBS said a few weeks ago its exposure to Lehman was less than $300 million. This sounds like a lot, but isn't in the scheme of things for UBS.

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Part of the unrest today is fear about the Lehman settlements that are due today, if I understand things correctly. Anyone know how much UBS is into Lehman? Is there added risk in that sense to UBS today?
  #397  
Old 10.10.2008, 19:22
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Re: How Safe is UBS

Interesting to see the Credit Suisse share price this week. Rumour has it that they have a Lehman exposure amongst other things and their 3rd quarter won't be pretty reading.
  #398  
Old 11.10.2008, 11:56
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Re: How Safe is UBS

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Interesting to see the Credit Suisse share price this week. Rumour has it that they have a Lehman exposure amongst other things and their 3rd quarter won't be pretty reading.
Unfortunately for them, CS (or I should specify CSAM) were *very active* in placing Collateralized Debt Obligations (CDOs) all around. According to what they were saying at one-to-one meetings at the time, most of the CDO issues were place internally in managed portfolios. Apparently, acct execs were "clamoring" for the stuff and so if we (i.e. my ex bank) had any interest in the stuff we would have had to expect to receive only a fraction of our overall interest.
Where is that paper today? Still in the clients' portfolios ? Did they just buy it back from clients even maybe even only 6-8 weeks ago and are now carrying it (at a LOSS) on their books? CS might yet be that bank that cripples Switzerland...who knows... :-/

Paul

p.s.: 100th post... pat on my shoulder. I would rather have had something positive to comment, instead of this. Sign'o'the times

Last edited by Uncle GroOve; 11.10.2008 at 11:57. Reason: edit
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Old 12.10.2008, 22:51
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Re: How Safe is UBS

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Well some national governments. To be fair, I think there's a difference between the government of a country of 300 thousand people and a country of 300 million people. At least that's what the strength of the USD and the yields on US treasury bonds are telling you.
Recently read an analysis by a German economics professor who assumed that in a worst case scenario the US could choose to default on all treasuries held by foreigners. In the end, the rest of the world could not do much except for confiscating assets held by US companies or declaring war.
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Old 13.10.2008, 09:16
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Re: How Safe is UBS

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Recently read an analysis by a German economics professor who assumed that in a worst case scenario the US could choose to default on all treasuries held by foreigners. In the end, the rest of the world could not do much except for confiscating assets held by US companies or declaring war.
As if there isn't enough doom and gloom. I bet he's the life and soul of every party! I'd give shorter odds that an asteroid will hit the earth. Three points...sovereign credit crisis happen when governments have borrowed large amounts in foreign currencies and their own currency depreciates to such an extent that it can't afford to service those external debts. I can see his point that there will be consequences to pay for the huge borrowing levels in the US but the US only borrows in it's own currency so it can just print money for repayments. Secondly, the US has a large taxpayer universe to tap for funds. Wouldn't make them popular at home but there is certainly scope for more juice to be squeezed out. Thirdly, if it ever gets close to a default risk then foreigners would have sold out of the dollar and Treasuries on the way down so the problem would much more of a US domestic problem that it is now. If things get so bad that the world's wealthiest country defaults on it's debt then the rest of the world would be in real sh*t. Any country that relies on overseas aid would be back in the stone age. The rest of us would be eating each other to stay alive and praying for that asteroid to hit.

Last edited by Nev; 13.10.2008 at 09:31.
 

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