Cuts are said to have gone down Monday. Continue reading »
Societe Generale
Today’s all-the-things-are-the-same-thing news, sort of, is Bloomberg’s report of the tiff between BlackRock’s Larry Fink and a guy at “Lyxor,” which is the name of SocGen’s ETF business and also a good way to make me think of the words “pyramid,” “casino,” “typo” and now “SocGen” all at the same time, which does not make me want to invest with them. Anyway, the crux of it is this:
So-called synthetic ETFs, offered by firms including Societe Generale’s Lyxor Asset Management and Deutsche Bank AG, introduce a layer of complexity and counterparty risk that investors may not be aware of, Fink said yesterday. Synthetic funds generate returns through derivatives contracts rather than owning underlying securities as traditional ETFs do.
“If you buy a Lyxor product, you’re an unsecured creditor of SocGen,” Fink, who heads the world’s largest asset manager, said at a conference held in New York by Bank of America Corp.’s Merrill Lynch unit. Providers of synthetic ETFs should “tell the investor what they actually are. You’re getting a swap. You’re counterparty to the issuer.”
Lyxor says au contraire mon Fink, physical ETFs are just as bad:
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Sources believe that Europe’s banking giants, including Deutsche Bank, UBS and Credit Suisse, along with Societe Generale and Dexia, are preparing to wield the ax in a way not witnessed since the depths of the financial crisis in 2008. “People will be fired everywhere,” said Dick Bove, an outspoken bank analyst at Rochdale Securities. [NYP]
Today seems to be the day of banks praising each other with faint damns, what with James Gorman handing out copies of a Credit Suisse report lowering estimates for Morgan Stanley. Goldman equity research is also out with a mammoth and interesting note on French banks, which against this market backdrop actually manages to sound pretty chipper despite warning of increasing risks, reducing earnings estimates and downgrading Soc Gen from buy to neutral. They also think that French banks will need to improve capital ratios, but aren’t sweating it too much. Here’s how they think that goes:
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Banks
SocGen CEO Doesn’t Want Your Dollars, Wouldn’t Take Them If You Begged Him
By Matt Levine
We have reduced our funding needs in dollars and we have buffers that can use if the situation carries on. I will communicate all that to the market and I am sure we will be able to regain confidence. … The amount of money market funds, funding resources, compared with the amount of buffers, is much smaller. We have 105 billion euros of liquid assets, 80 billion available to the central banks. It is much more than the current exposure to money market funds. Even if it were to go to zero, there would be no problem – forever.
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Jeffrey Gundlach is a hugely talented man. The bond manager, who is currently being sued by his former employer for alleged theft of proprietary information that he snuck out of the office in a secretary’s bra, can do it all. In addition to being, as he’s previously stated, “The guy who can make it rain the desert,” Gundlach is a self-described genius (who once asked a colleague, “What’s it like having lunch with a genius?”), a modern art expert, a dildo collector, an adult film critic, and a guy who’s got a legitimate shot at becoming an auctioneer at Christie’s or an announcer at the Greyhound Classic, which is the Kentucky Derby of dog graces. What you may not have known about Gundlach is that he is also a budding thespian, whose speciality is impressions of French guys that used to be his boss. Continue reading »
ironically fake john paulson buys real trees
With half of Europe having banned short-selling and anything that might loosely resemble it, if you think that French banks are undercapitalized then you may be seeking less traditional ways to monetize that view. One approach that you might have considered is writing a fictional account of a near-future Eurozone meltdown with real names of banks and individuals and selling it pseudonymously to a major French newspaper to publish in a twelve-part serial. If you live in the U.S. that may not sound like such a great idea, since we don’t consume a lot of based-loosely-on-real-events financial fiction unless it stars Shia LeBoeuf.
But in France, where after all mime is considered a form of entertainment, there seems to be a big appetite for fictionalized financial markets, as Le Monde found out when they puplished “Terminus pour l’euro” this summer. But Le Monde’s success may just have ruined it for the rest of you:
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The other day we noted that in the course of making fake trades at SocGen, Jerome Kerviel had invented a fake client who he’d named Matt, whose bio Kerviel added little flourishes to such as the fact that Matt apparently loved to play rugby. Today we hear from a non-imaginary colleague of Kerviel’s, none too happy about the fact that he owes her, a bottle of bubbly she’s probably never gonna get. Continue reading »
Jerome Kerviel Invented A Friend Named Matt, Built A Vivid Character Sketch Of The Guy
By Bess Levin
I knew there was a reason I loved Jerome Kerviel and today that reason became crystal clear. As previously mentioned, the former SocGen trader admitted faking a buncha trades during his time with the firm. Now, there’s this: Continue reading »
Was that wrong? Should he not have done that?
Under questioning by Judge Dominique Pauthe, Kerviel said he began making larger bets in 2005 and started falsifying transactions indicating he had covered his bets. Kerviel said he continued to exceed the 125 million-euro trading limit set for the Delta One trading desk where he worked in the years after 2005. “Seventy percent of the time, limits were exceeded,” Kerviel said when a prosecutor said he was the only one who exceeded limits. He said that the controls on his computer were “deactivated,” allowing him to fake transactions. The head of his trading desk knew as early as April 2007 that Kerviel was making fictitious transactions, Kerviel said.
"You lookin for a good time?"
Naturally it involves sucking dick for coke. I’m kidding! Though an admitted prostie, Kerviel is not that kind of whore. Continue reading »
