Hedge Funds

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5
Oct 10

The rhinoceros & the cockroach

A tale of tax, exile and bank commissions

Strength is relative, as was proved at my son’s recent sumo wrestling party. The padded, Michelin-man type outfits, over 7 kilos each, were loaded onto the nine year olds. Their momentum was rhinoceros-like when bashing into an opponent. On the other hand, when on their backs on the ground, they were like hapless cockroaches, waving arms and legs frantically but incapable of getting back onto their feet.

The mixture of weakness and strength is similar to that of the UK Banking Commission, which kicked off its year-long investigation of the sector stating that it will consider splitting investment and retail banks, the populist idea favoured by UK Business Secretary Vince Cable and others.  Continue reading...

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21
Oct 09

Why bonuses power the government

Plus HFSB’s Borges on modifying the EU directive

Some people see conspiracy, others see cock-up. The best tale from the Conservative Party conference was that Gordon Brown’s eye problem – two injuries in the retina of his right eye, while his left has no vision – was a carefully orchestrated first move. This was to be followed by his stepping down for ill health, his substitution by a more electable party member and victory by the Labour Party in a spring general election. 

A delicious tale. As absurd as the posturing by the parties about a windfall tax on the banks. It feeds popular anger about (some unjustifiable) bonuses, but would be deeply counterproductive. Not only are two of the largest banks, Lloyds and RBS, government controlled, but all banks need to restore their balance sheets and produce profits to help move the economy out of recession.  Continue reading...

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25
Aug 09

A hedge fund perspective

Near Brompton Cross in South Kensington, Jeeves, a drycleaner, has a big sign in the window: “Bankers still Welcome. 7 shirts will be done for the price of 5, How’s that for a bonus?”

I thoroughly approve of a deal and of the open arms to much maligned bankers. I even approve of bonuses. However, on a global scale, nationalised banks that have the effrontery to pay enormous guaranteed bonuses are abusing public trust, while those that argue they have not taken government money are conveniently ignoring that the whole macro system has been transformed in order to bail them out.

Or why else do we have quantitative easing and the slashing of interest rates and enough moral hazard to drown in?!  Continue reading...

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13
Jul 09

No pool toys for the banks this summer

To a private view of the Jeoff Koons exhibition at the Serpentine Gallery, courtesy of Pi Capital.  His latest series features inflatable pool toys for toddlers. Except everything is not what it seems. Homage to Salvador Dali lobsters, dolphins and turtles, are not light as air but made out of aluminum and painted to resemble the real thing.

Not unlike Nellie Kroes, the formidable EU Competition Commissioner (http://blogs.ec.europa.eu/neelie-kroes/). Except it is the reverse: she appears a heavy-weight when her powers are fast waning.  In the meantime, she scared the living daylights out of Lloyds Banking Group shareholders with her statement at the end of June that it could be forced to sell its Halifax or Bank of Scotland branch networks to comply with European anti-trust rules.  Continue reading...