Archive for the Economy Category

Dirty Tricks

When your strategy is to bet against the market — as it the case for most hedge funds who short sell securities (stocks and bonds) — there are bound be dirty tricks to uncover illicit information on companies or spread false rumors with the hope of manipulating a stock. Thus it will be interesting to see in the weeks and months to come, if the Financial Services Authority — the banking regulatory agency for the UK — can figure out who earlier this week tried to bring down HBOS, which owns Halifax, the UK’s biggest mortgage lender. HBOS: Malicious traders […]

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House Prices

I try not to pay too much attention to the everyday gloomy reports on the housing market in the US and UK but its quite difficult. Especially, when there seems to be a growing number of economists and other so called experts who are predicting a further drop in housing prices. And having purchased a home just last September, I am concerned about getting into negative equity. However, I do take comfort in the fact that my deposit was 10% and prices for my area seem to be holding steady. Case in point, a similar house on my street went […]

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Bear Stearns Collapse

Further comments related to specific companies involved with the liquidity crisis, credit crunch and sub-prime market will go unpublished on this blog. Why? Well my new employer is a global professional services firm that has many clients and prospects impacted by the downturn in the global economy. Thus fear of being dooced will keep commentary on specific companies to a minimum. That said, I can’t believe that Bear Stearns was sold to JP Morgan Chase for $240million. Even when you factor in the two failed hedge funds, the company had significant assets which apparently could be sold off for least […]

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America’s Northern Rock

To say we live in interesting times is an understatement. Yet another national bank — this time the Federal Reserve Bank of New York — comes to the rescue of the 5th largest investment bank in the United States, Bear Sterns. To be exact, funds are being loaned to JPMorgan Chase who will then lend this undisclosed sum of money to Bear Stearns to help the company stay in business. However, should the company default or worse yet go out of business, all the risk rest solely with the Fed. Basically, JPMorgan Chase is simply acting as a conduit for […]

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The British government has finally done what it should have done months ago — they nationalised Northern Rock. Yeah it sucks for the shareholders, but had the government not propped up the bank with £55B in loans and guarantees, the bank would have gone under months ago. Their business plan of relying on cheap loans from other financial institutions left then overly exposed when the global credit crunch hit! These loans simply became too expensive. Thus the shareholders have no one to blame but the reckless executives and the Financial Services Authority who failed to provide appropriate oversight. So long […]

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