Citi(bank) in crisis

Madness prevails . . .

HG

Hey HGC do you reckon the money market crisis in the US will spread to the UK?

My company sold some property and has the cash in the Money Markets on one month deposits. Though it seems unlikely the HSBC bank will collapse in the next 30 days since that would presumably bring down the whole UK banking system and economy these days it seems like its no longer impossible.

What do you reckon my chances of getting the cash are?

It’s not by any means isolated to the US. As for HSBC collapsing, well I don’t know about that. I certainly hope not, cos that’s where my loot is!

HG

[quote=“Huang Guang Chen”][quote=“headhonchoII”]I think the huge bonuses that were paid out to bankers everywhere as a % of revenue for each annual year could be a major part of it. That’s a recipe for disaster in any business, anywhere! The cheap money was being passed down a chain where everybody could get a cut, by artificially inflating the suppy and price of everything, bankers, developers, corporations and even governments (through taxes on property sales) were making double their money, simply by taking a % of cake that was growing artifcially bigger every year.

I’d bet at least half the executive bankers could see through the charade but were making so much money that they couldn’t resist it and probably thought it doesn’t matter because by the time the house of cards falls they were thinking ‘I’ll be sipping cocktails at my house in the Hamptons’. The best way to combat this would be to institute a ‘clawback’ clause, whereby if future losses were linked with short-term decisions the bank could claim these bonuses back.[/quote]

Bah! I work for a brokerage that had nothing to do with those crap loans because we knew it was crap and that it would eventually blow up. Consider it a game of pass the parcel. However, bonuses were high because revenue was high. You don’t pay, then good people go where the money is better.

Difficult for people outside the industry to understand the bonus system but also difficult to understand the long hours, stress and how you can be on your ear in a heartbeat.

Now if you were talking of CEO compensation, then I’d agree with you. They should be rewarded for the returns they bring shareholders, but often this is completely disregarded, usually because they signed for an agreed bonus at the outset. It’s the hook to bring them onboard

HG[/quote]

CEOs of banks then… Anyway the whole corporate system is top heavy. If you compare the spread of compensation between the top and bottom rung now with even a few decades ago its obvious it was out of control… guys like Geoge Soros have been saying it for years.

I dunno, I’m a conservative and I don’t like the way the financial system seems to work. Fiat currencies, weird financial products with massive leverage ratios, banks that seem to have no real collateral or control over their investments, auditors getting paid to hide fraud, internet bubbles. The whole thing as been a house of cards for ages.

No idea how to fix it though. Smarter people than me tried with Sarbanes Oxley and Basle II, and I still don’t know if they made things better or worse.

Maybe it’s inherently chaotic, but I still think you should be able to set things up so that even if asset price bubbles grow and burst it doesn’t cause a run on the banks.

Despite the odd bubble here and there we have muddled through rather well since the knights templar came up with the banking system.

A bit of a reform here, banks and conssorts learning from there mistakes there, no need to worry.

Imagine an existence without a meaningful banking system.

[quote=“Mr He”]Despite the odd bubble here and there we have muddled through rather well since the knights templar came up with the banking system.

A bit of a reform here, banks and conssorts learning from there mistakes there, no need to worry.

Imagine an existence without a meaningful banking system.[/quote]

I’ll swop you 3 shiny buttons and a very cool stone for a pint of your finest bar man.

But look at the money markets. There should be some sort of correlation of risk to rates of return. Back when it seemed to be working it was supposed to be low risk, low return. Now it seems to be high risk and the rate of return is actually negative. Something is not right here. I think the problem I and many other people have with financial services is the perception that there’s a group of insiders who collect the returns and outsiders who bear the risks. I’m pretty sure that’s the reason people don’t trust private pensions or buy health insurance or don’t do a lot of things that just means the state will end up picking up the bill.

Quite frankly I reckon if you put money into the financial system some stripy shirted braying bastard spends it ok cocaine, inhales it and then makes up some bullshit to explain that the money’s gone :slight_smile:

Whoa! Dangerously close to the mark there!

HG

I remember when I was back at school we had a teacher who used to play the commodities markets. Back in those days he had worked for IBM in sales and earned 100K sterling a year (when that meant something). In order to play the market you had to show net worth of 100K and he got it wrong - hence being a lowly math teacher.

I have no idea whether the rules remain the same, or whether anyone can play with commodities directly now but certainly anyone can buy a fund which invests in them. Whether this is a good or bad thing is moot. If you don’t understand what you are investing in - don’t buy it, its that simple.

For the record a lot of people have made a lot of money out of CDOs both subprime and prime. Now a lot of people have lost a lot of money. One of the key differentials is that some of the people who made a lot of money knew what they were doing.

If you buy your insurance from a mate who says buy this you are a mug
If you buy financial products from your bank without understanding them you are a mug
If you invest in the stock market without understanding the company profile that you are investing in and the likely risk - well do I need to go on?

Hitler gets a margin call.

:laughing:

HG

[quote=“Huang Guang Chen”]Hitler gets a margin call.

:laughing:

HG[/quote]
I love that meme. Have you seen the Banned from XBox Live one

jp.youtube.com/watch?v=sfkDxF2kn1I

“I may be forced to buy a PS3”
“Don’t worry, he’s not that desperate”

[quote=“Huang Guang Chen”]Hitler gets a margin call.

:laughing:

HG[/quote]

OMG. lol.

who produced that? it’s got really nice production values, props, set, costumes, very elaborate. and very cool dialogue.

The scene is from a brilliant German film called Der Untergang. The subtitles have been changed.

[quote=“Huang Guang Chen”]Hitler gets a margin call.

:laughing:

HG[/quote]

Hee Hee, just pissed myself.

[quote=“KingZog”][quote=“Huang Guang Chen”]Hitler gets a margin call.

:laughing:

HG[/quote]
I love that meme. Have you seen the Banned from XBox Live one

jp.youtube.com/watch?v=sfkDxF2kn1I

“I may be forced to buy a PS3”
“Don’t worry, he’s not that desperate”[/quote]

:notworthy: I almosts pissed myself watching that one awhile ago. Pure gold.

BTW, the real movie is a time very well spent, extremely daring and well done.

[quote=“Mr He”]This was not caused by rogue traders, this financial meltdown is systemic, caused by a systemic flaw in housing finance and how it is obtained and processed by the financial system. I kid you not.

Chopping off a few heads may help the feel good factor up a bit, however reform and learning from past mistakes will do more good longer term.[/quote]

I don’t agree, I think the CEOs should be lined up, look for examples of fraud (a simple matter I’m sure) and jailed.
That will certainly do a lot of good.

“If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them,
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered.”

Tomas Jefferson

Here is some interesting history.Take it as you will.
Pt 1 ca.youtube.com/watch?v=bymJC2mxd … re=related

[quote=“bereal”]“If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them,
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered.”

Tomas Jefferson

Here is some interesting history.Take it as you will.
Pt 1 ca.youtube.com/watch?v=bymJC2mxd … re=related[/quote]
That TJ quote looks highly dubious to me.

answers.yahoo.com/question/index … 834AAFNjM9

[quote=“MaPoSquid”]

As for the rest of this crap, I’m not even going to bother trying to do a line-by-line explanation of [expletive removed], just going to note that damn near all of it is silly drivel:[/quote]

Well someone agrees with me
bloomberg.com/apps/news?pid= … refer=home

Not sure that I followed all the Frodo stuff but the conclusion is in line with my analysis.