 Poster: A snowHead
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| mozwold wrote: |
@IanTr,
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what were the banking (punting to use your phrase) activities that gave rise to the write-offs and subsequent recapitalisation / bailouts seen in the UK in 2008?
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I'm not an expert, but shall we start with bundling multiple parcels of very high risk debt and selling it on as being as pure as the driven snow?
I have no doubt that the folks in retail banking work as hard as everyone else who has to earn a living, but it's still difficult for most people to see investment bankers or those who trade futures in oil/wheat etc- other than as being greedy narcissists with utter contempt for their fellow man. |
If it wasn't for the securitisation of mortgages and other debt then no-one would have any mortgages.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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@mozwold,
Well, the 'AAA' ratings accorded to these parcels of debt have in fact turned out to be accurate, with default rates of less than 0.1% on European RMBS (by far the largest component of the ABS market) both pre- and post-crisis. In any case they were only sold by sophisticated financial institutions to other sophisticated financial institutions on the caveat emptor basis that prevails in wholesale markets.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| mozwold wrote: |
@IanTr,
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what were the banking (punting to use your phrase) activities that gave rise to the write-offs and subsequent recapitalisation / bailouts seen in the UK in 2008?
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I'm not an expert, but shall we start with bundling multiple parcels of very high risk debt and selling it on as being as pure as the driven snow?
I have no doubt that the folks in retail banking work as hard as everyone else who has to earn a living, but it's still difficult for most people to see investment bankers or those who trade futures in oil/wheat etc- other than as being greedy narcissists with utter contempt for their fellow man. |
+1
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You need to Login to know who's really who.
You need to Login to know who's really who.
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If it wasn't for the securitisation of mortgages and other debt then no-one would have any mortgages.
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Mortgages existed for many years before the securitisation of them. Go and watch 'It's a wonderful life'.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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| T Bar wrote: |
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If it wasn't for the securitisation of mortgages and other debt then no-one would have any mortgages.
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Mortgages existed for many years before the securitisation of them. Go and watch 'It's a wonderful life'. |
The only way the UK, and the rest of the world's, banks can fund the level of mortgages in today's world is to parcel their mortgages into 'parcels' and securitise those debt parcels, moving off balance sheet, and proviing funds to continue lending. You wouldn't have a mortgage without it. If you believe in 'It's a wonderful life' then you probably believe in Angels getting their wings as well.
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You'll need to Register first of course.
You'll need to Register first of course.
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The only way the UK, and the rest of the world's, banks can fund the level of mortgages to people who canot afford to borrow and to whom no one in their right mind would lend to and carry the risk in today's world is to parcel their mortgages into 'parcels' and securitise those debt parcels, moving off balance sheet
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FIFY
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@T Bar, FNMA was set up before It's a Wonderful Life was released 
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@Arno, Fair point.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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| mozwold wrote: |
I have no doubt that the folks in retail banking work as hard as everyone else who has to earn a living, but it's still difficult for most people to see investment bankers or those who trade futures in oil/wheat etc- other than as being greedy narcissists with utter contempt for their fellow man. |
It's obvious that there are plenty of people on this forum who really don't comprehend investment banking in the slightest. The fact that it's a snowsports forum makes that perfectly understandable but the fact that they're prepared to exhibit their ignorance isn't
Investment banking is a long way from where it was 8 years Ago. I suggest people google the Volcker Rule to see what just a part of that change is. Very few banks investment carry out the old style "prop" trading that used to go on. Not only that, in the occasions when banks do have positions on their books that aren't client related they will all be hedged. The approach to risk in it's many forms (market risk, counterparty risk, credit risk, liquidity risk, etc) has moved on a huge amount and lots of money has been spent to get a better understanding of and management of it. Pre Lehmans I don't think people really took risk seriously or indeed understood the complex nature of it across entire financial systems.
Compliance is another area where things have seen a sea-change. Regulation is almost driving the banking industry now where previously it was seen as a mild inconvenience. I can assure you that Banks, and importantly their shareholders, have had enough of being constantly fined billions. I work in the compliance area and the amount of money that is being invested to ensure that the old shenanigans of old don't reoccur is very substantial. In fact the amount of surveillance that anyone on the front desk is under is quite astonishing. The Stasi would have given their right arms to have access to the analysis of employee's chat / emails / phone calls and even behaviour. I had to laugh the other day at the news report regarding someone who's emails made during work were looked at by their employer and just thought that it was only scratching the surface of what goes on in investment banks these days in the effort to make sure that any illegal or unethical activities are caught. I went to a presentation about this and the description of the capability of the technology and processes being used was like something out of a science fiction film.
There's also a huge misconception about the trade in commodity futures, and futures in general. They constitute a very important financial tool to many people from farmers to airlines. In the globalised world that we live in, if you're running a business and want to guarantee future income or expenditure then the only way to do that is by using futures. The fact that people speculate in these is just a by-product of it's nature and it's rather difficult to prohibit. Financial speculation is far from a new phenomenon, it's been around for at least 300 years (the South Sea Bubble).
I'm not saying that investment banking is squeaky clean and there will always be people that abuse systems but one could say that about people who are in charge of, or have access to, large sums in any industry or profession. The only difference might be the scale
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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[quote="dsoutar"]
| mozwold wrote: |
There's also a huge misconception about the trade in commodity futures, and futures in general. They constitute a very important financial tool to many people from farmers to airlines. In the globalised world that we live in, if you're running a business and want to guarantee future income or expenditure then the only way to do that is by using futures. The fact that people speculate in these is just a by-product of it's nature and it's rather difficult to prohibit. Financial speculation is far from a new phenomenon, it's been around for at least 300 years (the South Sea Bubble).
I'm not saying that investment banking is squeaky clean and there will always be people that abuse systems but one could say that about people who are in charge of, or have access to, large sums in any industry or profession. The only difference might be the scale |
This. I'm also involved in the industry. The basic users of the futures markets, and providers of liquidity, are major industry players and consumers of the commodities, who need to hedge their costs going forwards in order to budget properly. Equally, securitisation of loans and debt is the only way in which the money supply merry go round can exist to provide capital in the amounts needed by the economy, not least for mortgages.
The industry, like many many others, was not and is not squeaky clean as it is populated by people - and you only have to see content on here to realise where that can lead us. What is clear from the unthinking diatribe against banker funny fellows on here is two facts:
1) People have completely bought the self serving and convenient fallacy from politicians that it was completely the bankers fault - where in reality the largest element of the blame lies with politicians and society in general in thinking that we had shaken of cyclical behaviour and that everything would keep going up
2) Financial services and the capital markets in particular account for about 10% of the UK's output. That doesn't then take into account the add on from related services and then the trickle effect from London into businesses in the commuter belt.
You might hate bankers because you either don't understand the capital markets or have bought into them being an easy target - but you'll have to swallow your pride as they pay for the lights to be kept on.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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Hmmm, have the Iceland bankers just been misunderstood then?
And 1929?!
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Can we get back to russians or lack of.
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You know it makes sense.
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I'm sorry but the banking industry and the government have a lot to answer for. The banks lost huge amounts of money in the crash and were bailed out by the government. This government then sold off "our" share in those bailed out banks at a loss and meanwhile the banking industry has continued to pay big bonuses to the workers who carry out the dubious deals because it makes them money. There have been no real punishments for those who made these deals some of which were almost certainly fraudulent. Iceland nationalised it's banks, prosecuted some of the bankers and refused to pay back the losses and they seem to be doing quite well.
Lots of people lost, lots of money in the crash and some of them had no idea that they were "investing" in dodgy deals.
The City of London has special privileges and it is suspected that they abuse these privileges to prevent tighter regulation of the financial industry and to support UK dependent tax havens.
The capital markets might well enable the money merry go round, part of the question is should the merry go round exist?
I don't hate bankers but I don't fully trust them even if I do have little option.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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@essex, yes that is much more fun. Just saw a program of Russians in London - rich richer richest - now that is fun😂
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Poster: A snowHead
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