Monday, September 22, 2008

Cash for Trash, Bank Aid and the Real Meaning of Leverage

Three interesting links for today.

Paul Krugman outlines why the US taxpayer is getting a bad deal out of the $700bn dollar bailout. Krugman makes a good point that if the taxpayer is going to spend so much money, at the very least, they should be getting a share in these companies.
The other is a satire on bank Aid, courtesy of News Biscuit.

Sir Bob Geldof today launched a moving appeal to third world nations to ‘give whatever you can’ in the face of the ever worsening crisis in the western financial markets.

Addressing an audience of peasant subsistence farmers in Ethiopia, he urged Africans to ‘Give us your money. Pick up the phone and give us your ***ing money now. These people are losing their bonuses, their stock, their options… People are literally losing their liquidity right now and you have the power to stop it..’
How You Can Help Now
  • £1 buys you 0.00000000001% of a derivatives traders annual bonus, which might not get paid this year.
  • £500 buys you a round of drinks for the demoralised future traders to drown their sorrows in a prestigious soho Bar.
  • £10,000 buys you 500 nearly worthless mortgage bonds, which used to be worth £3million.
Also, worth mentioning an idiot's guide to financial terms

Credit Default Swap - I’ll cover a bond that will never go into default in trade for a premium of several million dollars a year just in case it does, but there are no assets to back it up.

Leverage - opaque ways to hide the risk and get moneys available to you anyways as a business. In common usage, this means having $5.00 to buy $5,000,000,000 worth of stock, options, and/or properties, companies, bonds, physical assets.

Government Regulators - a group of friends that you hire to work in the government run office that covers your industry that agree with your way of doing things and are normally appointed by the people whose campaigns and campaign shindigs you funded.

1 comment:

Anonymous said...

That good enough. Shares and purchases of securities can bail out the masacre of current economies situations. For instance, the Yielded in Oil prices at the close of yesterday's markets has seen many investors and Oil trading companies traded more from the new market prices at a different of $6.62 at $109.37 compared to last price of $120 a barrel which is 16 percent highest difference so far in the history of Oil prices. So, I think this will see bring more money into the economy to rescue mass global economy from the home of global business economy (U.S, U.K and other developed economic continents.