Monday, October 20, 2008

Just a Sprinkling of Government Bailouts

This weekend was light on the government bailouts, indicating that strained credit conditions around the world are easing. The Dutch government injected $13.4 billion into ING Groep, the largest Dutch financial services firm and South Korea agreed to guarantee $130 billion in bank debt.  Meanwhile, Iceland is set to announce a $6 billion IMF Fund-led rescue package to help stabilize its beleaguered economy after a spectacular failure of its highly leveraged banks.  It's nice to know that even though the IMF chief is busy having an affair with one of his subordinates, he can fit in a bailout loan or two into his very busy schedule.  As I noted Friday afternoon, significant signs of improvement were evident in the money markets as three-month Libor dropped 36 basis points to 4.06% and overnight Libor fell 16 basis points to 1.51%.
Crazy volatility in financial markets always unveils a few rogue traders.  Both the Chinese and the French (once again) have been taken to the cleaners by traders executing "unauthorized" trades.  Citic Pacific announced a $1.89 billion losing currency bet that was discovered after an executive violated procedures.  The Jerome Kerviel award, however, goes to Groupe Caisse d'Epargne, a large French mutual bank that uncovered  an $800 million loss resulting from derivatives trades that were supposed to profit from stock market gains.  The losses were attributed to a group of around six traders, so really, it's nowhere near as impressive as Jerome's attempt to bankrupt Soc Gen by himself.  Still, "unauthorized" trading seems to occur a bit too frequently.  I wonder how often the losses are just small enough to be buried into an earnings report.     

1 comment:

Anonymous said...


Recently an insurance company nearly wind up....

A bank is nearly bankrupt......filing chapter 11 protection.

How it affect you? Did you buy insurance? Did you buy mini note or bonds?

Who fault?

They bailout trouble finance company, but they will not bail out your credit card bills……the bill out of finance companies is due to all of them interruption with their major operating activities business, the loan business, subsequently, if other industries also interrupt their own operating business and asked for bail out within their sector…….Should they have use the bail out $$ to pump into all different industries……You got no choice, and no point pointing finger but you can prevent similar things from happen again……

The top management of the Public listed company ( belong to "public" ) monthly salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… And they are still spend big money on hotel stay and luxury function……..

Meanwhile if company was being acquired, there will be a great movement in terms of staff……eventually staff suffer also.

Are you a partisan?

Sign a petition to your favourite president candidate, congress member, House of representative again and ask for their views to not just comment on this, and what regulations they are going to commit and implementation the regulation, I believe should vote for the one who come suggest good implementation and let’s see who back up, which don’t implement after just mentioning in the election campaign.....If you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...


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