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On November 25 2014 04:12 Sub40APM wrote:Show nested quote +On November 25 2014 04:06 JonnyBNoHo wrote:On November 25 2014 03:43 Sub40APM wrote:On November 24 2014 17:53 Simberto wrote:Sorry to interject here, but could someone explain that thing to me? Maybe the problem is me not knowing enough about financial terms, but i don't really understand that article. Bank buys stuff at a credit, stuff loses money, bank has to pay interests for the borrowed money, and somehow the bank still makes money out of it through accounting tricks and is able to pay everyone dividents? And the investors love those assets because they are constantly profitable for some reason that i can not really understand despite losing money. My common sense tells me that you can not make money from losses, and thus someone is getting screwed here and/or the whole thing has to blow up at some point, but i don't really see who that someone is because according to the article everyone involved is happy with the situation. Which is really weird. People who got screwed here are: 1) Investors, because while they were happy to buy shares in Macquire Trusts prior to 2007 when credit was loose, after 2007 most of those trusts assets went into bankruptcy. I suppose there was some rare subset of investor who was only interested in receiving in dividends for 2 years, then they were happy 2) The state, since a road is a natural monopoly over an area it cant afford to let the road just fail. So they have to go in and re-purchase it out of bankruptcy. Since some of these road loans were co-invested into by the then conservative US government as part of its privatize everything always mantra the federal tax payer also paid. And unlike the current period when the US treasury gets free money from the federal reserve back then they actually were paying 3) The banks that loaned the money for the original purchase. The way it worked was: Banks and a corrupt consulting firm find a road, bank pays a ton of money for the road by borrowing on credit that looks like sub-prime borrowing, first almost no interest paid then a mountain of interest paid. Bank takes the new asset and then gives it to an 'independent' legal entity whose sole job is running that road. Bank then sells rights to other people in investing into that legal entity with the promise of steady dividends. Investors like dividends and reason that this is like owning a bond since the road is a natural monopoly so it will always recover money. In the meantime for every service now bank charges the "independent legal entity" fees, at first its no big deal because the massive debt costs of this new legal entity are so minuscule that there is a temporary river of cash. 3-4 years down the line there is no cash but the bank is no longer the legal owner -- if its particularly sneaky maybe it even bought insurance on the debt the legal entity now owes and when it collapsed the bank also collected on that. Your 2) should be wrong. The state should have received more than it deserved for the asset / was protected from declining toll revenues / able to buy back the asset at a lower price. Also, it sounds like some of the deals worked out fine, so I'm not sure how people can claim scam here. Some investments just don't turn a profit. Shocking, I know. I am talking about the Federal Governments loans, not the state. Its quite possible for both the private buyer to overpay for the road and the state to lose out anyway, private buyer stops maintenance on the road, the road declines, the extra 'profit' the state won in the initial bid is re-plowed back into the road. Yes, some scams workout fine for the scammee. People who invested in Madoff were better off than people who invested in AIG. Guess better let him out of jail guys, he did more net good for high net worth individuals than their broker.
The state shouldn't lose out with the information we have. If the road is in disrepair (shouldn't be too bad, there are rules) you factor that into the buy back price.
Your comments on Madoff and AIG are off the chart retarded.
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On November 25 2014 04:12 Sub40APM wrote:Show nested quote +On November 25 2014 04:06 JonnyBNoHo wrote:On November 25 2014 03:43 Sub40APM wrote:On November 24 2014 17:53 Simberto wrote:Sorry to interject here, but could someone explain that thing to me? Maybe the problem is me not knowing enough about financial terms, but i don't really understand that article. Bank buys stuff at a credit, stuff loses money, bank has to pay interests for the borrowed money, and somehow the bank still makes money out of it through accounting tricks and is able to pay everyone dividents? And the investors love those assets because they are constantly profitable for some reason that i can not really understand despite losing money. My common sense tells me that you can not make money from losses, and thus someone is getting screwed here and/or the whole thing has to blow up at some point, but i don't really see who that someone is because according to the article everyone involved is happy with the situation. Which is really weird. People who got screwed here are: 1) Investors, because while they were happy to buy shares in Macquire Trusts prior to 2007 when credit was loose, after 2007 most of those trusts assets went into bankruptcy. I suppose there was some rare subset of investor who was only interested in receiving in dividends for 2 years, then they were happy 2) The state, since a road is a natural monopoly over an area it cant afford to let the road just fail. So they have to go in and re-purchase it out of bankruptcy. Since some of these road loans were co-invested into by the then conservative US government as part of its privatize everything always mantra the federal tax payer also paid. And unlike the current period when the US treasury gets free money from the federal reserve back then they actually were paying 3) The banks that loaned the money for the original purchase. The way it worked was: Banks and a corrupt consulting firm find a road, bank pays a ton of money for the road by borrowing on credit that looks like sub-prime borrowing, first almost no interest paid then a mountain of interest paid. Bank takes the new asset and then gives it to an 'independent' legal entity whose sole job is running that road. Bank then sells rights to other people in investing into that legal entity with the promise of steady dividends. Investors like dividends and reason that this is like owning a bond since the road is a natural monopoly so it will always recover money. In the meantime for every service now bank charges the "independent legal entity" fees, at first its no big deal because the massive debt costs of this new legal entity are so minuscule that there is a temporary river of cash. 3-4 years down the line there is no cash but the bank is no longer the legal owner -- if its particularly sneaky maybe it even bought insurance on the debt the legal entity now owes and when it collapsed the bank also collected on that. Your 2) should be wrong. The state should have received more than it deserved for the asset / was protected from declining toll revenues / able to buy back the asset at a lower price. Also, it sounds like some of the deals worked out fine, so I'm not sure how people can claim scam here. Some investments just don't turn a profit. Shocking, I know. I am talking about the Federal Governments loans, not the state. Its quite possible for both the private buyer to overpay for the road and the state to lose out anyway, private buyer stops maintenance on the road, the road declines, the extra 'profit' the state won in the initial bid is re-plowed back into the road. Yes, some scams workout fine for the scammee. People who invested in Madoff were better off than people who invested in AIG. Guess better let him out of jail guys, he did more net good for high net worth individuals than their broker.
I'd think that the conveyance contracts have language in them that effectively force continued maintenance by the private company or some sort of reversion is triggered. If a private venture doesn't model the investment properly and goes belly up as a result, that's on them. So I don't really see the problem.
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On November 25 2014 04:17 GreenHorizons wrote:Show nested quote +On November 25 2014 04:11 xDaunt wrote:
Welp, here comes the Ferguson grand jury verdict. How long after the decision do you think it will take for us to hear the explanation for why he died 30 ft away from the car where the officer was (based on leaks) attacked? I mean we have heard about everything other than the moment that matters. Releasing the decision without releasing what (at least the officer said) happened after the conflict at the car would be intentionally sparking outrage.
I'm not sure that it matters. Though no full factual account has been released, what I have heard strongly suggests to me that there should be no indictment (of course, I'll reserve judgment). I doubt that those who are prone to outrage are going to care about the factual details [EDIT: see Trayvon Martin]. For them, the bottom line is that the oppressive, racist police shot another black kid dead. Nothing else really matters as far as they're concerned.
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On November 25 2014 03:31 Sub40APM wrote:Show nested quote +On November 25 2014 02:21 TheMusiC wrote:
The point of my statement wasn't that these people get paid to produce above-market returns -- it was that they get paid a lot of money to do their financial due diligence and not buy things that are bad and going to blow up. Small and/or underperforming hedge funds fail and close up shop all the time, by the way, you probably just don't hear about it.
big funds, with great salaries, and many very high achieving individuals blow up too. LTCM was the best hedge fund that existed before it became the worst hedge fund that existed. It was so big that the Federal Reserve had to organize the bailout of its investors and counterparties.
I think we agree here, funds underperform, close, blow up, whatever you want to call it, all the time. But they're still getting paid to not be lazy and do their homework. People make mistakes (although multi-billion dollar ones don't look very good for your track record) and markets sometimes don't go your way -- the job is to be diligent and do everything in your power to prevent that from happening.
Sophisticated investors can be duped just as easily as unsophisticated ones, sometimes easier because of the agency problem I razed. Someone who has a two year rotation on a pension funds internal investment team is already mentally removed from his nominal charges, but someone who is on that rotation and is presented with a AAA asset by the best bank in the world isnt evne thinking
This one might differ depending on who you ask, but if a fund's strategy is "only buy AAA rated assets" and I just went ahead and bought everything I saw rated AAA then I'm not really fulfilling my function to the firm and I'd be on the hook for whatever happened. And especially on transactions as complex as synthetic CDO's, junior analysts (the rotations you speak of) wouldn't be stuck on those on their own.
Sure, and then your line manager would show up and ask how come units x y and z are going to show double digit growth and you showed were in single digits, and when you point out you were being conservative you join your fired team on the outside. The system of short term performance incentivizes people not to be conservative.
Not sure if you actually know someone who works on a desk like this (or if you work on one yourself), but on my desk it's not like this at all (and I would imagine most banks share this attitude now). The primary concern is 1) don't do dumb stuff (shady, illegal, poor due diligence as outlined above, etc) and then 2) make money/don't lose money. You won't get fired unless you're lazy and/or doing stuff that's costing the bank a lot of money (see: the London whale). Some places might treat risk a little more aggressively than others, but for the most part from my experience if you've got good explanations for the results things will be fine.
Once you move out to hedge funds and trading houses then things get to be a little different, as at most hedge funds there is a massive pressure to produce returns, and this often leads to stuff like rampant insider trading (like what happened at SAC).
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You won't get fired unless you're lazy and/or doing stuff that's costing the bank a lot of money
Are we counting essentially telling your boss that the deal is sketchy as 'losing money', because people were fired for that too?
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On November 25 2014 04:27 xDaunt wrote:Show nested quote +On November 25 2014 04:17 GreenHorizons wrote:On November 25 2014 04:11 xDaunt wrote:
Welp, here comes the Ferguson grand jury verdict. How long after the decision do you think it will take for us to hear the explanation for why he died 30 ft away from the car where the officer was (based on leaks) attacked? I mean we have heard about everything other than the moment that matters. Releasing the decision without releasing what (at least the officer said) happened after the conflict at the car would be intentionally sparking outrage. I'm not sure that it matters. Though no full factual account has been released, what I have heard strongly suggests to me that there should be no indictment (of course, I'll reserve judgment). I doubt that those who are prone to outrage are going to care about the factual details [EDIT: see Trayvon Martin]. For them, the bottom line is that the oppressive, racist police shot another black kid dead. Nothing else really matters as far as they're concerned.
Some people prone to outrage think like that. Just like some people prone to outrage think Obama is a Muslim terrorist. Some people are upset that we can get recordings of his incident at the store, releasing of/speculation on fake injury photos circulated on major outlets, stories about what what Brown did wrong, but nothing NOTHING, about why he died 30 feet away. Which is the only thing that matters that hasn't been released.
If they mention how Brown attacked the officer, but neglect to mention why/how the officer shot the guy 30 feet from where he was attacked people have every right to be outraged (although that doesn't mean riot).
EDIT: But in a community that clearly feels like it is getting the raw side of the 'justice' deal in general (for good reason), to kill one of that communities children then spend months to decide you aren't going to press charges and in the announcement to not press charges you don't explain how the guy getting shot was legitimate you are begging for a riot (whether or not the response is justified).
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On November 25 2014 04:29 TheMusiC wrote:Show nested quote +On November 25 2014 03:31 Sub40APM wrote:On November 25 2014 02:21 TheMusiC wrote:
The point of my statement wasn't that these people get paid to produce above-market returns -- it was that they get paid a lot of money to do their financial due diligence and not buy things that are bad and going to blow up. Small and/or underperforming hedge funds fail and close up shop all the time, by the way, you probably just don't hear about it.
big funds, with great salaries, and many very high achieving individuals blow up too. LTCM was the best hedge fund that existed before it became the worst hedge fund that existed. It was so big that the Federal Reserve had to organize the bailout of its investors and counterparties. I think we agree here, funds underperform, close, blow up, whatever you want to call it, all the time. But they're still getting paid to not be lazy and do their homework. People make mistakes (although multi-billion dollar ones don't look very good for your track record) and markets sometimes don't go your way -- the job is to be diligent and do everything in your power to prevent that from happening. Show nested quote +Sophisticated investors can be duped just as easily as unsophisticated ones, sometimes easier because of the agency problem I razed. Someone who has a two year rotation on a pension funds internal investment team is already mentally removed from his nominal charges, but someone who is on that rotation and is presented with a AAA asset by the best bank in the world isnt evne thinking This one might differ depending on who you ask, but if a fund's strategy is "only buy AAA rated assets" and I just went ahead and bought everything I saw rated AAA then I'm not really fulfilling my function to the firm and I'd be on the hook for whatever happened. And especially on transactions as complex as synthetic CDO's, junior analysts (the rotations you speak of) wouldn't be stuck on those on their own. Show nested quote +Sure, and then your line manager would show up and ask how come units x y and z are going to show double digit growth and you showed were in single digits, and when you point out you were being conservative you join your fired team on the outside. The system of short term performance incentivizes people not to be conservative. Not sure if you actually know someone who works on a desk like this (or if you work on one yourself), but on my desk it's not like this at all (and I would imagine most banks share this attitude now). The primary concern is 1) don't do dumb stuff (shady, illegal, poor due diligence as outlined above, etc) and then 2) make money/don't lose money. You won't get fired unless you're lazy and/or doing stuff that's costing the bank a lot of money (see: the London whale). Some places might treat risk a little more aggressively than others, but for the most part from my experience if you've got good explanations for the results things will be fine. Once you move out to hedge funds and trading houses then things get to be a little different, as at most hedge funds there is a massive pressure to produce returns, and this often leads to stuff like rampant insider trading (like what happened at SAC).
Are you on a flow desk or a prop desk? On a prop desk you would be fired for sequential quarters of under-performance vs an index of other teams/banks. And regarding the protect against illegality first -- that is unclear, if you look at the chats of the rates and currencies teams at the affected banks, it seems pretty clear that the cardinal rule re-illegality at least on some desks is dont get caught, not dont do illegal stuff.
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On November 25 2014 04:35 GreenHorizons wrote:Show nested quote +You won't get fired unless you're lazy and/or doing stuff that's costing the bank a lot of money Are we counting essentially telling your boss that the deal is sketchy as 'losing money', because people were fired for that too?
Yes. Doesn't happen so much on the sell side (I've seen instances where concerns have been raised about not wanting to make a market because it was pretty obvious a hedge fund just wanted to run us over) but if someone says "hey, this thing looks kinda weird and I really really really don't think we should be buying it" and has the details and work to support the decision then it'll make people think twice. Of course some fund managers will go and make the trade anyway, you can't really do anything about that.
I don't know about '06/'07/'08, as I wasn't working in the industry then, but given everything that has surfaced about bank culture during that period I wouldn't be surprised if people were fired for questioning these things.
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On November 25 2014 04:48 Sub40APM wrote:Show nested quote +On November 25 2014 04:29 TheMusiC wrote:On November 25 2014 03:31 Sub40APM wrote:On November 25 2014 02:21 TheMusiC wrote:
The point of my statement wasn't that these people get paid to produce above-market returns -- it was that they get paid a lot of money to do their financial due diligence and not buy things that are bad and going to blow up. Small and/or underperforming hedge funds fail and close up shop all the time, by the way, you probably just don't hear about it.
big funds, with great salaries, and many very high achieving individuals blow up too. LTCM was the best hedge fund that existed before it became the worst hedge fund that existed. It was so big that the Federal Reserve had to organize the bailout of its investors and counterparties. I think we agree here, funds underperform, close, blow up, whatever you want to call it, all the time. But they're still getting paid to not be lazy and do their homework. People make mistakes (although multi-billion dollar ones don't look very good for your track record) and markets sometimes don't go your way -- the job is to be diligent and do everything in your power to prevent that from happening. Sophisticated investors can be duped just as easily as unsophisticated ones, sometimes easier because of the agency problem I razed. Someone who has a two year rotation on a pension funds internal investment team is already mentally removed from his nominal charges, but someone who is on that rotation and is presented with a AAA asset by the best bank in the world isnt evne thinking This one might differ depending on who you ask, but if a fund's strategy is "only buy AAA rated assets" and I just went ahead and bought everything I saw rated AAA then I'm not really fulfilling my function to the firm and I'd be on the hook for whatever happened. And especially on transactions as complex as synthetic CDO's, junior analysts (the rotations you speak of) wouldn't be stuck on those on their own. Sure, and then your line manager would show up and ask how come units x y and z are going to show double digit growth and you showed were in single digits, and when you point out you were being conservative you join your fired team on the outside. The system of short term performance incentivizes people not to be conservative. Not sure if you actually know someone who works on a desk like this (or if you work on one yourself), but on my desk it's not like this at all (and I would imagine most banks share this attitude now). The primary concern is 1) don't do dumb stuff (shady, illegal, poor due diligence as outlined above, etc) and then 2) make money/don't lose money. You won't get fired unless you're lazy and/or doing stuff that's costing the bank a lot of money (see: the London whale). Some places might treat risk a little more aggressively than others, but for the most part from my experience if you've got good explanations for the results things will be fine. Once you move out to hedge funds and trading houses then things get to be a little different, as at most hedge funds there is a massive pressure to produce returns, and this often leads to stuff like rampant insider trading (like what happened at SAC). Are you on a flow desk or a prop desk? On a prop desk you would be fired for sequential quarters of under-performance vs an index of other teams/banks. And regarding the protect against illegality first -- that is unclear, if you look at the chats of the rates and currencies teams at the affected banks, it seems pretty clear that the cardinal rule re-illegality at least on some desks is dont get caught, not dont do illegal stuff.
I've worked on both (interned at a prop shop, now at a bank). Like I said, the pressure is much different at a bank than it is at a HF/trading house. Most prop desks at banks nowadays have either been shut down or absorbed into the flow desks, although there probably is a fair bit of prop trading going on there as well (prop trading is another thing that's difficult to prove). At a hedge fund you would absolutely be put on watch if you lost money or underperformed for even a quarter.
Regarding illegality, I think you're being a little cynical here and letting a few bad apples reflect on the current state of banks (there are rotten people in every industry -- not an excuse, just a statement of fact). The "don't get caught" thing is a huge huge problem I have with the way the industry is regulated today though.
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Boy doesn't the media just love tense moments like this like in Ferguson. Announcement any moment but ramp up that fear mongering we got ad space to sell.
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CNN is now saying something I had been thinking.
The first thing that would happen if he was going to be indicted is that he there would be a warrant and they would arrange for him to turn himself in.
It hasn't happened. So the thinking is that he's not getting indicted.
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Unless he is already in custody? We'll know in about 10 minutes.
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20 minute statement coming up and questions will be answered.
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Given that Stephanoupolus is set to interview the cop, there will be no indictment.
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Reporters met him beforehand.
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This is starting to sound like a Not Guilty announcement.
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On November 25 2014 04:44 GreenHorizons wrote:Show nested quote +On November 25 2014 04:27 xDaunt wrote:On November 25 2014 04:17 GreenHorizons wrote:On November 25 2014 04:11 xDaunt wrote:
Welp, here comes the Ferguson grand jury verdict. How long after the decision do you think it will take for us to hear the explanation for why he died 30 ft away from the car where the officer was (based on leaks) attacked? I mean we have heard about everything other than the moment that matters. Releasing the decision without releasing what (at least the officer said) happened after the conflict at the car would be intentionally sparking outrage. I'm not sure that it matters. Though no full factual account has been released, what I have heard strongly suggests to me that there should be no indictment (of course, I'll reserve judgment). I doubt that those who are prone to outrage are going to care about the factual details [EDIT: see Trayvon Martin]. For them, the bottom line is that the oppressive, racist police shot another black kid dead. Nothing else really matters as far as they're concerned. Some people prone to outrage think like that. Just like some people prone to outrage think Obama is a Muslim terrorist. Some people are upset that we can get recordings of his incident at the store, releasing of/speculation on fake injury photos circulated on major outlets, stories about what what Brown did wrong, but nothing NOTHING, about why he died 30 feet away. Which is the only thing that matters that hasn't been released. If they mention how Brown attacked the officer, but neglect to mention why/how the officer shot the guy 30 feet from where he was attacked people have every right to be outraged (although that doesn't mean riot). EDIT: But in a community that clearly feels like it is getting the raw side of the 'justice' deal in general (for good reason), to kill one of that communities children then spend months to decide you aren't going to press charges and in the announcement to not press charges you don't explain how the guy getting shot was legitimate you are begging for a riot (whether or not the response is justified).
Didn't the autopsy show powder burns on Brown's hand, indicating he had been shot, or barely missed, at point blank range, which supports the officer's claim that Brown tried to grab the gun?
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I love how the guy has called out the media for just making shit up.
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EPT
