The ridiculousness of the market.

Did anyone see this? Porsche, a company worth around about $7bn has managed to acquire options of up to 75% ownership of Volkswagen, a company worth up to $115bn, by playing the hedge funds at their own game. Of course, now the hedge funds are complaining about it which is a real shame for them. I particularly like the comment made by the former Deputy Chancellor of Germany, Franz Munterfering, re certain people in the financial services industry:

"Some financial investors spare no thought for the people whose jobs they destroy. They remain anonymous, have no face, fall like a plague of locusts over our companies, devour everything, then fly on to the next one."

Masters of the universe, if you will. Or not.

Credit crunch and the UK made easy.

Interesting graphic here:


So, in bailing out the ailing banking system in the UK by spending at least £500bn, the government is over-stretching its spending projections by 81%. Where's Prudence when you need her? What's the bets that it'll be health and education that get squeezed (or squoze if you are Utahn, apparently), rather than say defence (now there's a misnomer) expenditure? And how many of these banking executives will be losing their jobs for messing up so spectacularly? How many won't get their bonuses this year? How many will do the honourable thing and resign their positions in light of their outstanding failure? Aye, nane. And whose money will they be spending? The taxpayers'. For the £50bn part-nationalisation component of the bailout alone it is going to cost each taxpayer £2000. I wonder if the banking executives will notice it in their annual bonus this year? I'm guessing not.

In spite of the goatee beard.

Ian Bell has written an interesting article in today's Herald on Marx and the current disastrous US financial situation here. It reminded me of the several visits I've made with friends to Highgate Cemetery to see Marx's tomb below:


Surrounding the tomb are the graves of numerous erstwhile left leaning people who in all likelihood, alongside Marx, would view the current situation in the US and beyond as nothing more than expected, and with some justification. There is no little irony in seeing the free market trumpeting Republicans intervening left right and centre and bailing out companies that are now seeing the spoils of their lackadaisical (at best) approach to financial management coming home to roost. But of course, we've to feel sorry for the managing directors. Not the millions of people who are facing homelessness and unemployment as a result of being conned into thinking that they could afford mortgages way above their income. The 'credit crunch' will make its way into history textbooks in time and whoever decides to take up the analysis of it will likely have to set aside some time to analyse the myriad terms, industries, sub-industries and tangles that the sub-prime market impacts on.

Oh, and another thing. The facility set up by Goldman Sachs et al to help stabilise the market (HA!) reminds me of a similar action taken 40 years ago in Basle when the international monetary system was having some difficulties. Who says what I do isn't relevant?

Andy Bevan I salute you.

For getting it so, so wrong.

Andy you see was, until recently, an employee of Lehman Brothers who worked in equity derivative finance. Andy received official word about Lehman Brothers' effective demise and his own redundancy yesterday and who did he feel sorry for? The MANAGING DIRECTORS! Why? Because 50% of their bonus was paid in stock in the company that is now worthless. Unbelievable. I'm finding it difficult to comprehend how you can feel sorry for people who have trousered millions from running a company who have filed for the largest bankruptcy in history. I guess that shows how Andy is a better person than me. Or delusional.

All here.