Sir Fred and his pension deal

This was front page news in the UK last week. Sir Fred Goodwin the ex-CEO of RBS refusing to hand back any of the 693k a year pension he took when he left RBS with a 24 billion loss for Q4 2008.

The politicians who signed it off have now backflipped and asked him to give it back. Several prominent articles in the financial press agreed that he should give it back. He refused, quite rightly stating that they had signed it off 6 months ago so they are contractually obliged. So now we have these backflipping political scum trying to use the press to guilt trip him into giving it back.

Yes, it was a great deal for him, 50 something years old, effectively never having to work again. But I've got to say, there's not much more we know now, that we didn't know back then. Some stupid dumbarse politican was happy enough to agree it 6 months ago. And that is precisely why we find ourselves in this situation in the first place. Dumbarse politicans who had no clue what they were doing when they are meant to be providing the regulatory framework to govern the financial markets which provide the backbone to the real eocnomy.

Here's Fred's letter refusing to budge. And it seems the majority agree with him in this survey, a survey which includes RBS employees!!

I say that Lord Myners who gave his approval for Fred's package in the first place should resign. Instead these twats are threatening to introduce special laws to revoke his deal which is solid under existing contract law!! What implication that would have for business and economic freedom, I dont know.... but I reckon it would be disatrous. What a political risk that poses to the British economy I wonder.... But then again you have the USA across the pond which is, in my opinion, tipping the scale away from its roots of free market capitalism and slowly on its way to a country of junky State owned basically defunct semi government institutions!!

What a complete mess...

Stick Those TARP Funds Where The Sun Don't Shine

Now, I hate to keep putting up links but this story is a cracker.

Am I the only one who witnessed the political theatre that was the 'grilling' of the 8 Wall Street CEOs called before the US House Financial Services Committee last week, to think that the whole thing simply revealed what a bunch of idiots many US lawmakers actually are ? Most did not understand the issues, had no grasp of the financial markets or how business works, and just saw this as a wonderful opportunity to jump on the bank-bashing bankwagon in an effort to pander to an electorate which is, by and large, as ignorant as they are.

CEOs from Bank of America, Bank of New York, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo were hauled up for a public flogging.....

And the story goes on - check out this clip of one grilling:



Just goes to show how inept our so-called leading politicians are....

more Banker Bonus....

Looks like a few out there are catching my drift

This story published today

The Banker Bonus Dilemma

Hasn't there been some press lately regarding the bonus payouts at Banks over the last few months!

I have to say, I can understand why the public is concerned at seeing institutions that received taxpayer support to survive, then go on to spend millions on "bonus" payments to their employees. However, we need to look at this situation in context.

Firstly, the disclaimer. Yes, I work at an Investment Bank which was a recipient of some TARP money. BUT, since I am a consultant, I am not a participant in the whole Bonus game, so I have no personal interest in seeing bonuses paid or not paid.

So, back to the bonus dilemma. The politicians have really dived headfirst into this. Barack has spoken about it and Gordon Brown is talking about this as well. Ever since these goverments took equity stakes in these institutions they have used it as a political tool to gain public support.

The REAL issue though is that the salary structure is weighted so much towards incentive payments, or "bonuses", that without them bankers are on fairly average salaries. I know, I wouldn't be hanging around, busting my arse off for 60 hours a week if I didnt get a bonus at the end of the year. So just at a time when we need good people to work hard and turn things around, we are left with a disenchanted workforce who are putting in less. Bit of a problem, hey?

So, fine you say, cut bonuses and bump up base salaries. But, isnt that a zero sum gain?

If you have high bases and a smaller bonus element, then you'll have a bunch of freeloaders floating around. Might even end up a bit like a government department with bureaucrats making work for themselves and achieving nothing...?

And what about the contractual bonuses that are written into the contracts of these high flying bankers? That is - the ones who actually generate money for the firm? There is no dodging these bonus payments. They're contractually bound and if not paid, a solid source of income generation for the firm would disappear.

After all this political crap, no wonder firms like GS want to pay the damned TARP money back. There are solid institutions out there, that took the money at the suggestion of the government, to give the policy some support when it was launched. Now they find themselves with a major shareholder that will change their mind on a whim if it means an extra vote or two...

So, tough situation hey, but geez Im sick of hearing these fat cat politicains talk about bonuses... How many stories are there of self serving pension arrangements and pay raises within politics? Funny how we havent heard much about that lately

Snowed in

Well, the biggest snowstorm I've seen in london has hit and theres about 6 inches of snow everywhere. Cant get to work and neither can anyone it seems... theres no buses, hardly and trains and tubes, but the snow really makes the place look a whole lot prettier!


Time to go and make a snowman in the park!!! Here is what Clapham Common looks like this morning!!!

Random stuff

Just got home from a mid-week basketball game. We played awful and I particularly played awful. Ended up fouling out with 20 seconds left but was not really able to play defence the whole last quarter with 4 fouls against my name....

anyway, we're not doing too badly. sitting in 2nd place in the league at the moment. But we're going to have to lift our game if we want to stay there. Check out the standings, our team is ANZSAC.

Rakeback and online poker

I made an interesting discovery this week.

I am a fairly regular player of poker online and after doing some investigation for a potential new site to use, I uncovered the world of Rakeback.

Simply - this is where you sign up to a poker site through an affiliate (similar to a broker i guess), and when that affiliate receives a % of your rake as commission, they pass some back to you as the player.

Well, thats interesting. just for breaking even in the poker room, I could be getting paid money back.

The stupid thing, is that as an existing customer, I dont qualify for this rakeback deal!! So what incentive is there for me to stay? I could move to another poker room and pay less commission effectively. There absolutely no incentive for existing players... I think this is something poker rooms should look into further as they are just creating a massive circluar movement of market share. I cant see how there's a net benefit to anyone.

Anyway, I have written to Betfair, and am hoping to get my account moved onto a rakeback account. If they refuse I'll just sign up elsewhere...

Update on Gold

Well what an interesting week!

The Gold idea got into a bit of trouble.... Although the USD has rallied, gold has acted in its safe haven role again.

There has been a general fall in risky assets across the board as a result of concerns over the UK banking sector and fears that there are more hidden problems to be exposed in the coming months.

I think its worth staying on the sidelines to see if a better entry presents itself closer to $1000 level.

I feel selling gold is a great opportunity this year so it will be important to think about the best tactic to profit from this. Thinking that selling gold in GBP may be an idea. Although the GBP/USD has tanked and made fresh lows this week below the 2001 low at 1.36, it is well below most fair value estimates and selling Gold in GBP may be a good idea to take advantage. I'll have to look into this further...

Sell Gold?

I thought I would pen my thoughts about Gold. Early 2008 highs around the $1000 mark with a post crunch low of near $700 in November 08. Currently it is trading around the $840 level.

Bottom line - Gold is 15% off its highs / 20% off post crunch low.

Compare this to generally highly correlated currency pairs:
EUR/USD currently 1.32, 17.5% off its highs / 7.5% off post crunch low.
AUD/USD currently 0.67, 31% off its highs / 12% off post crunch low.

What is supporting Gold?

Well as I have written earlier, Gold is generally a safe-haven investment which performs well in times of uncertainty. With fears about deflation floating about and concerns over the size of the projected US budget deficit, Gold has managed to hold its value quite well.

BUT - I see this as a good time to sell Gold. Risk 900 for initial target of 700, final target of 500.

I am bullish USD, I see AUD and EUR falling and also Gold falling. But of these I believe Gold is offering a better entry level with much more potential downside.

Lets see how this plays out.

Whats in store for 2009?

There hasnt been much activity from me on the blogging front lately for a number of reasons... but the festivities are over for now and 2009 offers the opportuinty to start a some new things.

So first of all, I have decided to try and devote more time to keeping this blog alive.... or even bringing it to life!! I am going to write an article each week about any topic that takes my fancy, financial markets to online poker to sports. If I come up with anything interesting, I'll post up the story.

Firstly, a few thoughts about the FX market. The good old Aussie battler had had a nice bounce through December and sits now a good 20% off its lows of 60c. Against the GBP it is back near its highs of the last 5 years at just over 2 aud to the pound. The brief spike in GBP/AUD to the 2.70 highs now seems like a distant memory. Especially for us Aussies living in the UK, it was just a massive tease..

Through this year though I would be inclined to see the GBP bounce back a bit. Personally I am a bit of an AUD bear and I like it back down in the low 60s through the first half of 2009. I like the pound to move back to the 2.30s against AUD as well, or maybe thats just blind hope.. who knows.

As far as online poker goes, I am keen to get back into my groove this year. Didnt play enough in 2008 and when I did, it all went pear shaped. I get frustrated and go on tilt regularly which usually wipes me out for a while. This year I think I am older and wiser and hope to make a bit of cash a hopefully win a few tourneys.

As for Chelsea, who knows... We're still in the Premiership race, have a nice draw against Juventus in Champions league and have scraped a 3rd round FA cup replay against Southend. I was at the Southend game on the weekend and what an awfule result.. Cant believe I sat in the freezing cold while we waster opportuinty after opportunity only to have Southend equlaise in injury time... I am hopeful/wishful/dreaming for a reversal of fortunes on Sunday against Machester United. At least we are still pretty well placed considering the poor form we are showing at the moment!!

Bring on 2009!!