Tag Archives: Citigroup

And the news is where?

Well there was the news this morning ‘World leaders return to ‘Davos in desert’ a year after Khashoggi boycott‘, but I dealt with that 4 days ago during ‘When we say ‘Ney’ to an event‘ (at https://lawlordtobe.com/2019/10/24/when-we-say-ney-to-an-event/), complete with the summit time frame, seems like such an interesting delay. Perhaps the entire Nikkei setting is rather more interesting than that. Nikkei review giving us “Mizuho and SMBC among 15 names planned for historic listing“, whilst also giving us “The roster of underwriters could change depending on where Saudi Aramco goes public“, that part will get more visibility in the stage where ‘Aramco proposes two-stage IPO, shunning London and Hong Kong‘, that partially made sense, especially as HSBC took a flounder in the last year, by itself it is not a explanation, yet the events that overlap Jamal Khashoggi and certain times events in that light have not been considered ‘fair play’ by the Kingdom of Saudi Arabia and in that light the events shunning London would make sense. And this is the direct consequence of certain tasks made by certain elements who thought that jerking off the market because the going was good some kind of thing. Well, yes, that is exactly how I would phrase it, especially over the year when we saw Saudi Arabia being hunted and nagged in three different ways; I think it is fair to call it that. I see no reason to call it any other way. Now that the initial plans for a petrochemical location in China is ready to be mapped out at $10 billion, China will have new options whilst Saudi Arabia is opening a new vat of tactics, the US is now up in arms to sooth their longtime partner and they better pucker up. The US made sure that the Khashoggi matter got light and then the lost track of their novelty, they were not prepared for the windfall others made of it and now we are given: “The crown prince denies involvement, but told US TV last month that he took “full responsibility as a leader in Saudi Arabia”” an issue that was out in the media, but did you not consider the cost involved? Did you think that this comes for free? Even as we were given “it triggered Saudi Arabia’s biggest diplomatic crisis since the 9/11 attacks as world leaders and business executives sought to distance themselves from Riyadh“, it does come at a cost and Aramco is the first to exact the cost of doing business, it is the first of several steps, the deals with India and China are too soon, too visible and it shows a Kingdom who was sick and tired of two faced options in oil, now that we see that the Kingdom of Saudi Arabia has options, now that the west is about to learn that you cannot play certain games, now they will all be about the ‘miscommunication’, they will be all about the freedom of the press even as we see that the freedom of the press is some convoluted story, some story that we tended to warn scholars about, like we see in Umberto Eco, the name of the Rose (post-glad infringed upon for this event) ““Until then I had thought each preacher spoke of the events, human or economical, that lie outside books not told of. Now I realized that not infrequently books speak of white papers: it is as if they spoke among themselves. In the light of this reflection, the gathering seemed all the more disturbing to me. It was then the place of a long, annual murmuring upon an imperceptible dialogue between one vision debated on and another ones paper, a living thing, a receptacle of powers not to be ruled by any human mind, but the cistern of wealth merely a treasure of ill spoken events emanated by many minds, surviving the death of those who had produced them or had been their conveyors.”

I recently had to revisit an abbey in northern Italy so it made sense as well and the years are actually in several ways applicable. The Divine Comedy (Dante Aliegieri) finishes at this stage, the era was founded by double entry bookkeeping, the Italian bankers who designed it had no idea what impact it would have on accountancy or that the practice would survive until today. Yet, Umberto Eco placed his novella in an interesting time, Yet that time 680 years later we see that the question of wealth is very much at the heart of the matter, yet not in hands of the Christian church, it is there that we see the actions of certain members of coinage to be handled from. Feel free to disagree with me, but when you place the events as they were played over the last year and who exactly started these accusations, with the preemptive part of evidence that cannot have any further meaning, including the UN Essay by A. Callamard, can we answer in any other way that something is apparently wrong?

We merely need to look at the impeachment of a Trump card, a mere clown in the entire financial orchestra, when we see the steps allocated by intelligence and civic groups, whilst a Crown Prince was indited on paper with no resulting evidence, do you really think that it is merely a farce? Now that the Kingdom of Saudi Arabia has met with two events, it is stronger than ever to settle Aramco, to settle oil disputes and America might not care, but now that their own surpluses and their own economic value is now under attack, its 21 trillion dollar noose will become more than just the chain around a junkyard dog seeking a larger yard to bark in. And now it is only just that I include the bank that was around in the beginning of Umberto Eco’s tale, in 1327, from brothers financing governments the Banca Monte dei Paschi di Siena (BMPS) would grow and from its acquisitions in 2008, the hidden losses and the bailout in 2013 it never stopped being the BMPS, J.P. Morgan, Mediobanca, Banco Santander, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank and Goldman Sachs had signed a pre-underwriting agreement with BMPS in July, with all kinds of assurances, several of them all now shunned in the Aramco deal.

There is part of it that I cannot prove, I am not stating that I found certain links that are personally as shallow as it gets, yet certain people made transfers to other avenues, and in those positions they would if that deal went through made huge waves, if nothing happened, then they would be in an interesting place, so we cannot go on anything that flimsy (I don’t work for the UN after all), but the time line is weirdly skewed in certain visibility graphs, one would consider that certain acts would have been ‘concidental’ top a fault if it would have happened and it would have been the savior of what would be the “the industrial plan of the bank was approved, which the bank would be re-capitalized for €8.1 billion, but only €3.9 billion would be underwritten by the Ministry of Economy and Finance (excluding additional shares that would be buyback from retail bondholders by the government), with the rest were the “bail-in” of bondholders, mandatorily converted the bond of the bank to shares” Some would ask questions on the grounds of Margrethe Vestager, yet they would be wrong, I believe that certain matters had been in the frying pan a lot longer than that. And the entire Saudi Arabia matter does not stop there, where it stops is up in the air, because both Wall Street and a wealth banker that is above all this would prefer it this way, so when some are stumping their chest giving you the goods on some deal, just be thankful that it is not your coinage that is depending on this deal.

That is the underlying sound of more than just an Aramco deal, it is all over the place and even if my view is not to be seen as the correct one, consider what evidence you are going from, I never told you the little evidence that I have based this on, for the mere reason that two or three memos could be seen as mere typo’s, but how could my story exist?

Consider that I gave visibility to certain parts weeks ago, and that I was ahead of the curve for some time, after which my interest merely grew in other directions, I had finished the puzzle, I had no real reason to watch it unfold until completion, it was merely an exercise at that moment and like all other people, I hate exercises.

Yet I left two parts out, it is not important, but it gives a larger play towards the entirety, consider Davos in the Desert 2015, who was there and who absconded, consider that this was BEFORE Khashoggi and who came out of the woodwork? That is one part; I let you figure out the second hint. Now consider what options the Kingdom of Saudi Arabia has left when the table is spread the way it is, I wonder if you can see the irrefutable acts of discrimination.

 

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When we say ‘Ney’ to an event

We have all kinds of events going on, some we attend, some we show interest in, some are nice to be at. We have all kinds of events that require our attention. For example if there are 7 events to watch and you can only attend 4, how will you go about it? I for one distinguish it into a whole range of requirements, the first being ‘Have to attend‘, that is number one and in that cadaster 2 of the 7 will be found, then we get the ‘Nice to be at‘ and ‘Show interests in‘, they are of equal footing (in my case), now we have three more and we can settle our differences in to any of the three, it is more of a jumble, for those two out of three we get to watch the travel arrangements, the visitor spectacle and there we are off to the races.

That is how it goes into the normal realm of opportunity, so as I look at ‘Davos in the Desert‘ it would be one in the ‘Have to attend’ group. The heads of states are there, my Trademarks office could optionally score one large fish, the tranquility of having one corporate trademarks revenue is just too lard to pass up on. And that is before we consider the opportunity that trademarks in the Middle East and predominantly Saudi Arabia with companies like SAMA, SAMI, Aramco could have over a much larger setting, apart from the IP that I am holding on to. For Bloomberg this is what I call a ‘must attend’ kind of a show, so as we are given: “Axios reported earlier on Wednesday that Bloomberg reporters were scheduled to moderate nine of the panels in a draft of the program. Ty Trippet, a Bloomberg spokesman, told Axios that “Bloomberg is not sponsoring the event or participating in the program. We will be covering news from the conference, as we did last year.”” gives a stemming sound, a ‘we are there but we are not‘ kind of hustling in the woodwork. For a show like “Davos in the Desert“, seeing Bloomberg to remain absent is almost like a denial of the importance of “Davos in the Desert“. I see it in a larger frame, Bloomberg is doing the bidding of its corner office, Bloomberg called back like the little dog it is, the wonder of this chihuahua would be the Wall Street pound, they want the world to know that they are upset that Aramco went to the Japanese. A given 3.54% of every ticket sold that would be the income of most hedge funds managers who saw Aramco as a nice on the side grown food, now going towards the Nikkei, there is a larger game afoot and Bloomberg gets to be the messenger. I wonder how many US newspapers will hold some kind of a Khashoggi reverent during the October 28–31 window, I wonder how many newspapers will call upon the dead reporter, all whilst the events in Turkey will not call for any events, will they. Yes, the death of one journalist against the bombing of an entire group of people is so much more justified. Yet there is a large group of US people in attendance, we see Treasury Secretary Steven Mnuchin, Energy Secretary Rick Perry, and White House senior adviser Jared Kushner. Former Treasury undersecretary David Malpass, now the president of the World Bank, is also on the list, as is former White House communications chief Anthony Scaramucci. Then there are the top financiers  Michael Corbat, CEO of Citigroup, Tidjane Thiam, CEO of Credit Suisse, and Noel Quinn, CEO of HSBC. Fund managers include Ray Dalio of Bridgewater, Robert Smith of Vista, Stephen Schwarzman of Blackstone, Larry Fink of BlackRock, Daniel Loeb of Third Point, and Barry Sternlicht of Starwood. Even Masayoshi Son of Softbank is there and so is Will.i.am. The British entertainer and part of the Black Eyed Peas, beyond that he is a rapper, DJ, songwriter, record producer as well as a philantropist. He gets to be there, yet Bloomberg is calling ‘no show’?

I have no goal or esparations perse, but I would go there because one customer from that isle means that I would not have to go scrapping for customers for at least 8-12 years for 50% of the time. The rewards are that impressive, also the foundation of IP laws would be sought after in such a place, and being one of less than 20 attendance given IP lawyers, it would be interesting, even if a dozen of them end up with my business card, it will gradually mean that business comes my way, now for me it is not a given but for someone like Bloomberg it very much means that the larger corporations will be setting meetings with someone like Bloomberg, but now, we see “the State Department recently booked 45 rooms at Riyadh’s Burj Rafal Hotel in support of the two “VVIP visitors” taking part in the kingdom’s third annual Future Investment Initiative, as the event is officially known“, as well as “including representatives from Goldman Sachs, JPMorgan Chase, Citigroup, and BlackRock, according to a guest list” and some of these parties will get to grow to a rather large setting especially now that Bloomberg is not appearing.

And when you look at the event: PDF DavosintheDeseert2019

You’ll see that anyone with commercial aspirations would want to attend, which beckons the question why would Bloomberg not attend? More worrying is the setting of making this blaze about a week ahead of schedule. From the very beginning when H.E. Yasir O. Al-Rumayyan, Advisor to the General Secretariat of the Cabinet of Ministers, Governor of the Public Investment Fund, KSA opens the event, until the final event where H.E. Bassem Awadallah, CEO, Tomoh Advisory, UAE moderates the final event, namely the G20, a setting I would presume that Bloomberg has vested interest in, but they give way to absentee. 70 events over 3 days, with all kinds of interim discussion options, yet the absentee of Bloomberg make perfect sense, does it not?

 

 

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How weird are these two?

I got confronted with the weirdest article in the Independent today, the article was 4 days old, but then, I do not frequent that paper so often, hence, I initially missed it. The article (at http://www.independent.co.uk/life-style/gadgets-and-tech/gaming/playstation-plus-price-date-details-sony-online-play-latest-expensive-cost-rise-hike-a7864351.html) gives us: “It’s about to get a lot more expensive to play PlayStation online“, which is an exaggeration to say the least. Now, for the longest time, the PlayStation plus has remained the same (as far as I remember), yet now we see a rate rise. The amount it rises with is £10 per year of £1 per month. It equates to 16% monthly, or 25% annually, yet the percentage increase is wrong, because it is £6.99 per month (new price), which comes to £83.88 per year, yet the full annual is a mere £49.99, which is only 59% of the monthly price on 12 months, so overall it remains a really good deal. So, as he whines on that event and how you can cancel the subscription. He also forgot to mention the fact that those with PlayStation Plus get 7 free games a month to play with, 3 PS4 games, 2 PS3 games and 2 Vita games, and the one subscription covers ALL three devices. Is it not interesting how that part got overlooked? The additional fact worth mentioning is that the list from June 2010 onwards has offered in total 493 games, 25 games had 90%+ ratings, which included games like Mass Effect (2+3), Bioshock Infinite, Batman Arkham City, Journey, Far Cry 3, God of War and a few others, So as we see the list offered, the £1 a month, or £10 a year does not add up to too much, when it amounts to 84 free games a year, which gets us an ‘enormous’ £0.11 increase per game (which makes it £0.59 per game in total) and in addition the access to multiplayer gaming, which we set at £0 for this exercise. So when Andrew Griffin writes that it is all about to get ‘a lot more expensive‘, I wonder if he has any clue on the gaming industry at all. Now, we know that there is hardship all over and that people can afford less and less, yet the option to get games at £0.59 per game remains a really good deal. In addition, you get them for the three devices without needing separate subscriptions. So I feel that Sony has always offered a really good deal for the gamers. Now, we might not always get the greatest games, yet 100+ titles had a higher than 80% rating and 25 games in addition had 90% or higher rating, so the people are getting really good games and they get a lot more than Microsoft offers and much better titles. The one part that the article does offer the reader is that if you try to renew the subscription now, you can get it for the ‘old’ price which is a pretty sweet deal, so you can delay the price increase for a year. In light of all this, not only is the description ‘a lot more expensive‘ a joke to say the least, the fact that the increase will not start until August 31st is also a clean option to quickly get the renewal now whilst the games are a mere £0.47 per game.

So when I see the title part ‘As Sony makes it more expensive to play online‘ I do wonder where he got his insights. Factual he might be right, yet in the day and age where the price of a PlayStation Plus videogame is set at less than a 1 pint bottle of Tesco Organic British Whole Milk, the entire setting of ‘a lot more expensive‘ should keep you on the floor laughing for some time to come.

From my point of view my response to the Independent is ‘Bad form, Independent, bad form!’

Second place issue

The second issue shown is one that was given to us in both the World Finance site as well as the Wall Street Journal. The issue given is “America’s young men are increasingly giving up on work in order to slay virtual aliens and fight videogame wars, new research suggests”, which is more than merely a laughable joke. The original source US National Bureau of Economic Research, the part that calls out might be “Academics from Princeton University, the University of Chicago and the University of Rochester say there’s ample evidence that since 2000, men who would otherwise be working are instead being drawn into immersive virtual worlds….”, yet what is this based on? You see, the data past 2008, a date many will remember, saw the Youth unemployment rate rise from 10% to 19%, after the beginning of 2011 those numbers have been declining steadily down to 9%, so the unemployment rate for the youth is now close on par with 1968, when it was the lowest in US History and only slightly better than 2003 which was the lowest at that point for close to 30 years. So when we consider those facts, it seems that the makers are giving us what some would regard a hatchet job. My title for that might be slightly too crass; yet when we see “Since 2004, time-use data show that younger men distinctly shifted their leisure to video gaming and other recreational computer activities. We propose a framework to answer whether improved leisure technology played a role in reducing younger men’s labor supply”, so how idiotic is such a notion when we consider the 2004 and 2008 meltdowns that thrashed the economy in several ways, in that same timeline, US unemployment (all) was set to 10% in 2008, with a steady decline that follows roughly the same downward trend to a little over 4% at present, now we might agree, that whilst unemployed those youthful individuals would divert towards videogames it is a path that is still better than heading towards the streets trying to be gainfully and criminally active.

In this the quote used by world finance “While eight percent of younger men were not in work in 2000, this number rose to 15 percent in 2016”, is more than inaccurate, according to worldfinance.com it is an outright lie. Governing.com gives us some extra information that is actually useful. Their quote (at http://www.governing.com/gov-data/economy-finance/youth-employment-unemployment-rate-data-by-state.html) is “The employment-to-population ratio for younger workers had only recovered about halfway for its recession-era decline as of early 2017. Youth employment rates have returned to pre-recession averages in just four states”, which seems to fit the other sources. This is what could be regarded as something that pisses me off. With ‘Leisure Luxuries and the Labor Supply of Young Men’ by Mark Aguiar, Mark Bils, Kerwin Kofi Charles and Erik Hurst, I have a hard time just giving it too much consideration. The paper has additional flaws, the consideration that we see on page 4 with “We further exclude full-time students who are less than age 25” which is a chunk of undergrads and post grads that work at least part time to be able to afford food and other small issues like books. So the numbers are already skewed, in addition some sources give us that 80% of the full time students work part time, which marketwatch.com gives us, which was part of a Citigroup study. The UK has numbers on 1 out of 7 students work and study full time, this might not be reflective of US students, yet it should be to some extent reflective of students in some of the US metropolitan areas like New York, Los Angeles and San Francisco where the cost of living remains a rising burden. It is in section 6 on page 31 when my laughter explodes. The issue given “we can use time allocation data to infer the rate of technological progress for gaming and computer leisure since the early 2000s”, this a given? With two recessions and the non-working youth being a historic high in 2010, surpassing the recession of the early 80’s is more than just an issue, with numbers showing a steady decrease since then, the job market starting to open, whilst outliers have a stronger impact. In 2017 retail shed 60,000 jobs in the US, whilst Wal-Mart and Amazon seem to be in a strategic battle of realigning jobs towards online presence, all elements that impact the job market. So as jobs get realigned through strategy, where do the jobs end up? What will those people do when they are not working? The information Forbes gives us on this is even scarier when it reflects the need for consumer appeal via transferred initiatives. In all this, the paper does give some interesting premises, yet relies on certain parts, which are I light of the two recessions a little too much of a stretch, yet the fact on how the formulas were used is actually quite interesting. Another flaw is seen on page 32, now this is the flaw as I personally see it regarding the data as showed, yet without the actual questionnaire on view, there is a flaw in both the results and the way that I see it might be, so we need to be aware of that.

With “We stratify by three groups: younger men who spent zero time on computer leisure the prior day, those who spent 2 hours or less, and those who spent more than 2 hours”, the flaw is the ‘when’, I would spend well over 2 hours playing after a full day work, so when we consider the working population with or without full time study, we see that the graph is flawed. Even the other way round, part time students with a full time job, they could fall into the 2 hour plus gaming bracket. It is that flaw that calls even more doubt into question regarding this paper. A final ‘consideration’ needs to be given when I take a look at the ‘Leisure Engel Curve’. Here I also must admit that I will give doubt to my own thought as I might not have comprehended that part completely (apart from the formula), you see, they do state “With the leisure Engel curves, we can link shifts in time spent across activities to an implied change in the marginal utility of total leisure”, yet does this part correct for any hype (read: diversion through peer and social group pressure)? I doubt that very much, as evidence I call for the Pokémon Go wave that started in July 2016, which is clearly computer leisure (read: mobile gaming leisure), yet the paper has not taken mobile gaming in any of it and sets gaming as a static given, yet this wave suddenly pushed 60 million people to a hyped community in the same group as other gamers, whilst mobile gamers can be set into any part of an idle time setting (like travel time), this disjoints the entire exercise as I see it and gives a larger (read accelerated) gaming community in a shifted setting according to the settings as given, yet not corrected for any version of the definition of what constitutes a gamer.

Even as we can admire the formulated exercise, we need to concern that the raw data is not reliable as such and that there are additional issues that the data model and the questionnaires and requested data cannot correct for. In addition when we see the models, there seems to be no consideration for idle time and/or transit time and the consideration of handheld devices or smartphones which calls for even more questions on the gaming environment.

No matter how clever some will think the paper looks like, from the stage as I see it, there are too many unknowns or unanswered question marks and in reflection the conclusion and some of the media statements are not in line of the reality of the recessions the people lived through.

That is merely my setting where $0.02=C(1+r)^t

 

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Rated into immorality

Can anyone explain something weird to me? The news is given (at http://www.theguardian.com/technology/2014/nov/14/twitter-given-junk-credit-rating) to impress upon us a combination of values and steps that are beyond immoral. Consider the tweet, tweet twitter engine. I use it almost every day, it is the one unbiased part where we can follow events, people and companies so that we keep up to date, small messages that bring the actual information. A company that had a massive idea, is making money, when we see the quote “Jim Prosser, a spokesman for Twitter, pointed to S&P’s own words as comment: “Twitter will continue to experience very strong growth and not encounter a significant increase in competitive pressure.”“, we see issues, but is anyone seeing the question behind it? Then we see the one little gem hidden in all the text “The rating is unsolicited“, is this part of the issue? You see, as we look at companies, their revenue, their profit and some might consider their contribution, so as we look at it why is S&P suddenly decided ‘Twitter given junk credit rating‘? It seems to me that there is an economic shift going on. As companies are doing well, they are now getting downgraded for not meeting the expectations of some analysts.

Yet, where is this world going to?

Consider the application of morale (a word not found in a financiers dictionary) and reasoning for my thought train at present is the following: ‘Forex-rigging investigation: George Osborne gives full backing to SFO‘ (at http://www.theguardian.com/business/2014/nov/14/forex-rigging-investigation-george-osborne-sfo). Libor, Forex, Tesco and there is absolutely ZERO indication that this is just it. At the edge of reason we see the quote ‘Because I don’t want you to see any of my wobbly bits‘, which sounds ample and applicable as the financial district of happily ‘screw everyone over‘, it is all about the wobbly bits, according to Bridget Jones!

Consider the Forex articles. The second one is http://www.reuters.com/article/2014/11/14/us-banks-forex-crime-idUSKCN0IY0LV20141114. The issue is not just the events, the quote “Royal Bank of Scotland, HSBC, JP Morgan, Citigroup, Bank of America Corp and UBS were hit with penalties. Barclays is still in talks with authorities over a settlement“, which not just how far the issue has overstepped, but the issue is where banking laws are falling short, short to the extent that we have in access of half a decade. The issues continued after the banking collapse as the financial population continued to be nothing more than an eager courtesan to the bonus they so crave. The end result is a malignant decay of morals, standards and all this now (as I personally see it) on the standards as the poor are left with less than none, so Standards & Poor it is!

We now get back to what I regard to be a new level of exploited levelling. Consider the hidden simplicity that Libor held; now consider that debt ratings Moody’s, S&P, Fitch and the relative newbie Egan-Jones decide on ratings. Combine ‘how to lie with statistics‘ (a famous book by Darrell Huff) and the need to manipulate the market for 23 billionaires and we see the light of junk status made Twitter in a whole new light. Consider the basic state of an economy. A company sells, makes profit and pays taxes, a nation flourishes! This is a naive (remember my non-economic degree?) approach towards the worlds cloud of business. Investors, shareholders, analysts and raters are a cog within a machine of cogs. Yet this inner circular machine is different. It inflates, malleably changes and coaches towards a change that seems to be intent on syphoning and draining virtual cash flows into a different premise of profit, which is then turned to actual money. In an age of debts that go beyond the total of all treasuries, virtual numbers that have little to no foundation. The foundations and the levels they have been compromised towards are of a dimension we never imagined possible. Consider that the big banks have been fined in excess of 2.3 billion (at http://www.forbes.com/sites/halahtouryalai/2013/12/04/big-banks-fined-2-3b-over-illegal-libor-cartels-more-fines-on-the-way/), I wrote about it in ‘60% confiscated and counting in Cyprus!‘, on April 1st 2013, yet do not think this article to be a joke. I stated “If this is what frightens the US, then consider the consequences of a system like LIBOR being manipulated through the total value of trade. If that would have been off by 11.2%. Out of $1000T (UK and US combined) then that difference would be $112T“, several people laughed out loud then, yet now consider not just Libor, but the audited events of Tesco, the $5.3 trillion market of Forex and the fact that morality might be found in a church, but as we see the evidence, morality is not found in banks and financial institutions, where will it end?

With the Twitter events that question becomes more debatable and the impact that rating companies now impress upon profit turning companies have. Is it just about profit, or about the stated ‘anticipated statement of profit’? As certain ‘analysts’ claim that events are not exceeded, stock becomes junk, waves are created and as such, the welfare of companies are tweaked into a state of artificially changed state, some are inflated, some deflated, but always towards the claim of raters and analysts. The bottom line set towards an algorithm. Consider these states as we have seen not just the change of Tesco, but the events as they also gave way of downgraded profits with Sainsbury, which was not so vocally seen before that day in September. Interactions on many levels, based upon foundations that no one seems to question. Consider how the expectations were set by ‘analysts’ based upon data given to them and data available to them, now consider how Tesco had a quarter of a billion inflated and how the Pricewaterhouse Cooper auditors were ignorant of the inflated condition, now consider how Analysts used that element in predicting waves, the raters predicted and set the value and they are now setting the anticipation of investors and shareholders, an artificial pool with tidal wave creating capacity, and the two elements that have the ability to set the power and size of the waves. So how is your view of financial morality now? Consider the final part in this story. When we consider a story on Fortune titled ‘Twitter is junk, while Alibaba is class, ratings agencies say‘ (at http://fortune.com/2014/11/14/twitter-is-junk-while-alibaba-is-class-ratings-agencies-say/), why is that? Twitter is still holding its own, is it perhaps that the waves of Alibaba can be more easily influenced? Companies valued at the ability where the waves can be decided by the financial cogs, the stability of Twitter is less interesting to them, so they make way for whoever can aid in creating the waves these financial people want. (The last part you read is all speculation on my side), yet speculation or not, when we see the waves of Libor and Forex, are my thoughts so far out of bounds? How Twitter making millions is downgraded, how Tesco, beyond the inflated profits, still made a billion, it’s downgrade of 90% seems excessive beyond punishment, but Tesco is not a good example (because of their own internal manipulation), Consider the Fortune quote “And the fact that Alibaba is 90% dependent on a home market that is slowing, while acknowledged as a risk, doesn’t seem to scare the agencies“, it does not scare them, or it appeals the dependency of Alibaba to make certain decisions down the line? There is a side that seems ignored by all, I personally still have a hard time believing that (as my calculation went in ‘Price Waterfall Blooper‘ on October 25th) the price for 199 auditors could not find two events of inflation of each well over 100 million. Are my suspicions in regards to manipulations that far-fetched?

I wonder how long it will take for the law to catch up, for the Department of Public Prosecutions (DPP) or Crown Prosecuting Services (CPS) to get a handle on these events and deter these actions to such a degree. There should be additional questions as the raters are all American, in light of their shortfall that approaches 18 trillion at present. It seems that the US has no options, no solution and no resolution strategy, yet we see that the big four give ratings are all American. The last part is not an accusation in any way, yet the fact that the Auditors need new oversight, especially in the light of American auditing firm Pricewaterhouse Cooper as they will face questions regarding Tesco. As the 4 largest auditors include UK and Netherlands, why are there only American raters (of the proportions of the large 4)? With the risk of manipulation, should there not be a British and even a French or a Dutch rating service? Let’s not forget that PwC faces possible investigation, not because they are more likely than not guilty, but because their innocence needs to be proven beyond any doubt, especially in light of the amount of companies audited by them as well as the issue of 199 auditors (as I calculated them) not finding anything. When we consider the length of time that PwC has had Tesco as a customer, yet, these are two separate issues, there is no inkling of suspicion that auditors are part of any manipulation, yet the auditor’s data is essential to such steps.

Where is the solution?

Not sure if I know of one, laws can be made draconian to give much harsher sentence to the transgressors, but the issue is not the transgressors, the issue is that these ‘manipulators’ have by definition of law not broken any rules. Yes, we see the fines of Libor and soon Forex, these transgressions are seemingly clear, but what of the raters and the analysts? The issues of data are at the foundation here. That what is raw data and how it becomes processed data is now at the centre of it all. That what is construed to be the creator of waves through analysts, raters and auditors; Auditors collecting the data, analysts to manipulate (which is what they might see as a simple application of personal preference and weighting) and raters to set the pace for investors and shareholders.

So tell me, how wrong is MY view and why have these influential cogs not been dealt with through legislation?

 

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A noun of non-profit

The EU is getting a few more jabs using jibs, as it sails through the rough weathers of recession. Germany is up, France is down and the UK is about to remove their ship. If the Dutch economy does go up, it will be a plain victory through Nutricia as it shipped several containers of baby milk powder to China. As each container contains 20.000 boxes of Nutrilon (Source: http://www.nos.nl) this could be a first step to stem the tide of some safety for the Chinese baby nutrition. Yes, the article could not leave out the emotional side of crying mothers at the cash register. There is in opposition to the statement in the article little or no guarantee that supermarket hoggers will stop trying to ship baby food to China for now, as it is fast money for those involved and there are additional groups of tourists and foreign students trying to lend a helping hand to their families. This is the one consumer strongly aiding babies and the Dutch economy.

However, they are not there yet. The EU economy is no milk run as it is presently presented. It is not just the economy. If you think that just the local (read national) budgets are a problem, no it gets worse. The EU Budget itself is also coming up short. So that clearly reads that we have nations with a deficit, and now that the group that they belong, which also has a budget is ALSO in deficit. In an interview president of the Euro group Jeroen Dijsselbloem stated on the NOS journal in the Netherlands that the Dutch budget will get hit for up to a little over 500 million Euro (which was stated to be a worst case scenario). In addition the IMF stated the worrying condition of the Netherlands. The Dutch NOS reported the prediction that even though the Dutch economy will shrink another 0.5%, they do predict a growth of 1.1% next year. I personally join the group “Oh ye of little faith!” on that one and if they are able to get the economy up to 0.2% positive in 2014 than they would have achieved quite the small miracle.

The shortage, extra payments and several other ‘bad news’ moments we are likely to hear during 2013 would effectively prevent that 1.1% growth. We will know the actual number next year, but I am putting it out, right here, right now! I must admit that the idea of calling Christine Lagarde next year telling her “told you so!” seems definitely more appealing than a 2 week free for all in the Playboy Mansion (but then, as many have stated before, I was always wired slightly weird).

So, the Dutch government, who was unable to keep their budgets (like several other nations), and after getting a 1 year extension to get their budgets in order, this happens. The Netherlands is however not the only one, and this is not about having a go at the Dutch.

The French are also on the recession list. Or better stated, the French situation might soon become dicey to say the least. Even though their economy is not deep into the dip of bad economy, 0.2% is still an issue, especially as this is a continuing line of sub zero numbers goes on. If we look at the IMF Document called ‘World Economic Outlook‘, April 2013 (http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf) shows that these numbers who seem to be on par, are not that accurate. If we take the word from Dutch (NOS) and Belgium (VRT) sources we see that the Belgium shortage is now set past the 3% point, which is a big no-no as the EU had set an upper margin of 2.8%. So the account balance which was set for Belgium in the time range from 2012 to 2014 was supposed to be -0.5, -0.1 to 0.2 is now -0.5, -0.3 and ??? So we need to take into account that these were predictions, yet, if the numbers are off either by registration or by prediction (0.2% national difference is a lot of money), then we have another issue. What else is missed?

 

This is exactly why governments should not be allowed to skate to the edge of the ice (read maximum budget shortage) to that extent. All these predictors and good weather ‘reporters’ that the ice is good and the ice looks fine and the ice is thick enough feels to me that it would be part of the flim-flam confusion act. The issue is that even though these statements might all be correct, people forget that all involved parties neglected to check the quality of the ice below the surface. That part is now breaking off, in part due to many others jumping up and down on the ice for an extended period of time to the point that the skater now ends up taking a dive in the water and is starting to drown. There lies the problem! Should you doubt this part, than reflect on these events in regards to the Greece eternal debt.

Consider that the big nations are all in debt, even Germany. Yet Germany took a hard handle on their debts and fought it to lessen the power debt had. The issues that the other large players are stuck in a wrestling embrace with recessions and risk taking banks should not be lost on us. In addition several of them like France, Italy, Spain, Portugal, The Netherlands, Belgium and Slovenia are in a less good shape at present. When we then add Greece and Cyprus, we end up in a garden party with large portions of recession and deficits to go around for all players of the economy game.

I am not telling anything I had not blogged before, yet the issue remains and the game seems to be changing at present. If the UK, by pressure of its population is moved to walk away from the EU then we have a new situation. As long as the UK was part of the EU, they had a stable anchor in play.

Consider a large (really large) barge, that barge was kept in place by 4 strong anchors. UK, France, Germany and Italy. Yes, we to do know that most are in shabby state, yet, overall these nations are large, stable and democratic (that matters). They keep the Barge EU afloat in a stable place on the whimsy stormy sea called economy. If the UK walks away, then we have a new situation. None of the other nations have the size and strength of the anchor required and the EU now becomes a less stable place where the barge shifts. This will have consequences, but at present, the actual damage cannot be easily foreseen. Any claim that there is no consequence and they predict no issues, remember this moment! The Barge (as is), will lose stability and the smaller members thinking they are on a big boat are now thrown left to right then left again as the storm rages on. The smaller nations will get damaged and in addition, the weaker ones (Cyprus and Greece) could still collapse, especially if the UK takes a non EU gander.

There is however an additional look. Some could take at a paper by Edda Zoli called “Italian Sovereign Spreads: Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions“. It is an impressive piece of work. and can be found at: “http://www.imf.org/external/pubs/ft/wp/2013/wp1384.pdf“.

The abstract states: “Volatility in Italian sovereign spreads has increased since mid-2011. This paper finds that news on the Euro area debt crisis and country specific events were important drivers of sovereign spreads. Movements in sovereign spreads affect CDS spreads and bond yields of Italian banks, and are transmitted rapidly to firm lending rates.

Oops! That is interesting, as this is exactly the fear that drives some of us, especially when we saw Cyprus and recently the worries that the Co-Op Banking group is giving us and not to mention to unresolved issues on Barclays, Royal Bank of Scotland, SNS Reaal (now nationalised) as well as possible future issues with Banca D’Italia (The Bank of Italy), who currently seems firm and strong, yet if Italy continues to fend of the Austerity measures we will see an increased wave of issues that could have far fetching and long term consequences.

In regards to the UK, when looking at Barclays I found this with the New York Times in March 2013 By Julia Werdigier. “Despite the bank’s weak profit and legal woes, top executives at Barclays have been richly rewarded in the years since the financial crisis.” In addition it states “The payouts come at a difficult time for Barclays. While the stock was awarded before 2012, the compensation may still give additional fodder for critics, who have complained about the industry’s outsize pay packages.” That is not all! On May 7th Reuters reported that the Citigroup has sued Barclays PLC for over 140 million dollars for the 2008 Lehman Brothers party, a party from which some banks are still trying to recover from almost 5 years later. In addition there is the LIBOR rate ‘scheme’, which costed Barclays in the form of a fine exceeding a quarter of a billion pounds. Then we get Citigroup now claiming, wanting desiring and demanding over 140 million. Oh Joy! Yes the Barclay executives (around 430) ended up with a total bonus of over 650 million. So how much money did Barclays make? (Read on to learn)

This example shows exactly my fear. If we see the paper by Adda Zoli, we see part of the issue. If the national debt grows, the risk increases. The UK has a debt in excess of 1 trillion pounds. That is a lot! Banks seem to have less and less, and as such you and me (you know your average dopey lender) has less and less chance of any future in these dark days. Now, to be clear, Barclays was NOT bailed out by the government. They took the high road and decided to cut down on staff by almost 7000 (over a period exceeding one year). Like that is not additional pressure on the government? Yet, all these bonuses, which might have allowed them to hold all their staff for another 4 years for the price of 1 year of executive bonus.

In addition, Zoli’s paper is specific to Italy, yet that same approach might also be used to look at the danger levels in several EU countries. Take these facts and now extrapolate back to the big barge called EU. We can speculate that as people on the boat are thrown overboard. It changes the weight of the vessel as it loses, not gain stability. In addition, some get such high rewards, rewards that are kept to them, not used to maintain the barge! These factors will impede that barge even more and those additional factors are overseen and given to us in the form of ‘bad news’ moments that just pop up. Remember the extra EU payment at the beginning? So a barge, now less stable and a drowning population, all in the Economic Ocean, a restless pond, that is East of the Atlantic and West of the Pacific.

It is important to realise that these Barclays executives have not broken any laws. They were ‘rewarded’, yet Barclays reported a Nett loss of 1 billion for 2012. Seems utterly wrong doesn’t it?

 

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