Technically Fundamental
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Being an accountant I've been watching this banks story quite closely. Any one with a bit of common sense would know that any business, bank or no, would have closed down if it was running with operating losses running into the billions. It's not feasible. Therefore, all the banks losses had to have been the writing off of bad debts ie the amount of sub prime loans sold on for which remuneration (financial at least) had yet to be recieved and the writing off of the overvalued assets ie the amount of of sub prime loans they held that they thought they could hide.
This means that in the years that they made the "losses" they will pay no tax. I'm also sure that they'll have some ex PwC/GT consultant working around the clock to see how much corporate rollback relief they can claim on their gains. This means they can offset this years loss against the previous years profit and claim back the tax paid.
So basically, all the fat cats got fatter after creating false wealth. Then they claimed government money when they got caught. Now they will claim back the tax on their lies.
So when the world leaders are at the G20 summit purportedly sorting this mess out, why is it that they just decide to say a really big number to the public and then do this:
From reuters
"HARSH WORDS
The G20 leaders said the measures agreed to would raise world output by 4 percent by the end of 2010, although they were hazy on the amount of stimulus spending to date, with estimates ranging between $2 trillion and $5 trillion.
They agreed to triple the IMF's resources to $750 billion and to a package worth $250 billion over two years to support global trade flows, which are forecast to fall 9 percent this year.
The leaders of the world's richest and biggest economies, which account for more than 80 percent of world trade, also agreed to tighten rules on tax havens, hedge funds and credit rating agencies.
Markets took the big headline $1.1 trillion figure in their stride but were perhaps cheered more by the fact there was no dramatic outcomes after harsh words on the eve of the summit by French President Nicolas Sarkozy.
A split had threatened to emerge between Washington, which wants more money pumped into economies to stimulate a return to growth, and France and Germany who favour tighter regulations of the financial industry.
"We expected a lot of discord between the U.S. and U.K. and France and Germany, with China poking its nose in as well, but they seem to come out of the event as one connected group, seemingly on the same page," said Dwyfor Evans, currency strategist with State Street Global Markets in Hong Kong.
"It implies that there is policy coordination and not policy discord," he said.
Some reaction to the G20 outcome was more sceptical.
"For now at least the trillions of unmovable, over-valued and mismarked loans that continue to sit on the balance sheets of the world's banks are forgotten. It's amazing what a winning smile and some collective handshakes can do," said Sean Keane, managing director of Triple T Consulting in New Zealand and a former Credit Suisse strategist.
The generally positive G20 tone came as a U.S. accounting standards board decided to allow banks more flexibility in how they value the toxic assets that forced billions of dollars in write-downs. [ID:nN02355900] The changes, to take effect in the second quarter, could reduce writedowns and soften the blow to bank earnings.
The G20 reaction also helped mask disappointment at the decision by the European Central Bank to cut its main financing rate by half the expected 50 basis points, to 1.25 percent. Investors shrugged off their disappointment, some betting more cuts were on the way.
But there has also been plenty of bleak news quantifying the human cost of the global crisis.
On Thursday, data showed the number of U.S. workers claiming jobless benefits was at its highest level in 26 years.
The number of jobless seeking assistance also rose sharply in Spain in March and euro zone unemployment jumped to 8.5 percent in February.
The U.S. March unemployment data is expected to show that the economy shed 650,000 nonfarm jobs in March and that the unemployment rate climbed to 8.5 percent, which would be the highest level since 1983."
Personally, I think think that in the scheme of things, this action is comparable to a working man deciding to phone up a debt consolidation company off of the TV. Or maybe
doing an equity release plan on his mortgaged house.
Now, I know some of you are smart-a*ses and that other work in banks etc and as I don't have any experience in advanced global macro-economics or geo-politics I'm just wondering what you guys think of all this. What is it that they're tring to achieve?
This means that in the years that they made the "losses" they will pay no tax. I'm also sure that they'll have some ex PwC/GT consultant working around the clock to see how much corporate rollback relief they can claim on their gains. This means they can offset this years loss against the previous years profit and claim back the tax paid.
So basically, all the fat cats got fatter after creating false wealth. Then they claimed government money when they got caught. Now they will claim back the tax on their lies.
So when the world leaders are at the G20 summit purportedly sorting this mess out, why is it that they just decide to say a really big number to the public and then do this:
From reuters
"HARSH WORDS
The G20 leaders said the measures agreed to would raise world output by 4 percent by the end of 2010, although they were hazy on the amount of stimulus spending to date, with estimates ranging between $2 trillion and $5 trillion.
They agreed to triple the IMF's resources to $750 billion and to a package worth $250 billion over two years to support global trade flows, which are forecast to fall 9 percent this year.
The leaders of the world's richest and biggest economies, which account for more than 80 percent of world trade, also agreed to tighten rules on tax havens, hedge funds and credit rating agencies.
Markets took the big headline $1.1 trillion figure in their stride but were perhaps cheered more by the fact there was no dramatic outcomes after harsh words on the eve of the summit by French President Nicolas Sarkozy.
A split had threatened to emerge between Washington, which wants more money pumped into economies to stimulate a return to growth, and France and Germany who favour tighter regulations of the financial industry.
"We expected a lot of discord between the U.S. and U.K. and France and Germany, with China poking its nose in as well, but they seem to come out of the event as one connected group, seemingly on the same page," said Dwyfor Evans, currency strategist with State Street Global Markets in Hong Kong.
"It implies that there is policy coordination and not policy discord," he said.
Some reaction to the G20 outcome was more sceptical.
"For now at least the trillions of unmovable, over-valued and mismarked loans that continue to sit on the balance sheets of the world's banks are forgotten. It's amazing what a winning smile and some collective handshakes can do," said Sean Keane, managing director of Triple T Consulting in New Zealand and a former Credit Suisse strategist.
The generally positive G20 tone came as a U.S. accounting standards board decided to allow banks more flexibility in how they value the toxic assets that forced billions of dollars in write-downs. [ID:nN02355900] The changes, to take effect in the second quarter, could reduce writedowns and soften the blow to bank earnings.
The G20 reaction also helped mask disappointment at the decision by the European Central Bank to cut its main financing rate by half the expected 50 basis points, to 1.25 percent. Investors shrugged off their disappointment, some betting more cuts were on the way.
But there has also been plenty of bleak news quantifying the human cost of the global crisis.
On Thursday, data showed the number of U.S. workers claiming jobless benefits was at its highest level in 26 years.
The number of jobless seeking assistance also rose sharply in Spain in March and euro zone unemployment jumped to 8.5 percent in February.
The U.S. March unemployment data is expected to show that the economy shed 650,000 nonfarm jobs in March and that the unemployment rate climbed to 8.5 percent, which would be the highest level since 1983."
Personally, I think think that in the scheme of things, this action is comparable to a working man deciding to phone up a debt consolidation company off of the TV. Or maybe
doing an equity release plan on his mortgaged house.
Now, I know some of you are smart-a*ses and that other work in banks etc and as I don't have any experience in advanced global macro-economics or geo-politics I'm just wondering what you guys think of all this. What is it that they're tring to achieve?
