Well it is official the political party leaders in Greece failed to reach on the agreement and the re-election is on the cards. The jeopardy conditions calls for the lenders withdrawing $898 million from greek banks. What will happen if Greek exits Euro ? Who will pay their debt in-case if they exit Euro and the future of Euro lot of dilemma needs to be addressed.
The ripple effect of the above is that the parties who oppose the austerity measures upon which Greece’s bailout is conditional, such as Syriza, will gain support in new elections. View full article »
I do not know why but somebody wanted me to define some basics on Yield spreads, that whether Yield spreads can judge the risk environment in an economy ?
Yield spreads are good tools to judge the risk environment in an economy a lower yield spread means that the issuer of debt is in a situation to demand loans at a lower spread above the yield of government security which in turn shows the presence of ample liquidity.
As far as economic growth is concerned a lower yield spread indicates greater amount of liquidity available for growth View full article »
Continuing from my yesterday’s post why Central clearing is one of the solution if we just analyse recent crisis.In the financial crisis of 2008, banks feared that their trading partners might not be able to meet obligations to make good on the credit-default swaps,and on derivatives plus other financial arrangements. The situation set off a chain reaction that paralyzed global markets until governments and central banks provided enormous financial support.
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The way derivatives have evolved over the years they attracted criticism along with the praise.Corporates continues to take advantage of leverage with them many went belly up and some made fortunes out of them.
Here are some of the Jargons these days the firms uses :
- Diversification : Lets do several things that we don’t know any thing about badly
- Sticking to the knitting or Focus : Lets get back to doing what we once did if any body can remember what it is and how it is to do it
Recalling a chapter from Traders Guns and money Beautiful lies on sale side how derivatives are misinterpreted or mis-sold, It’s very simple trying to figure out the hierarchy of the trading floor. There are Sales people – they lie to clients. Traders lie to sales and to risk managers. Risk managers ? they lie to people who run the place – a small correction they think they run the place. The people who run the place lie to shareholders and regulators
The last post that I did Derivatives derivatives soooo many, resembles outstanding derivatives with the top 5 banks of the world, here is some basic background for my non financial market friends about derivatives. View full article »
I am a big fan of Jim Rogers and Marc Faber the two masters of commodities market that I know, unfortunately haven’t grabbed any book written by them but have read a lot about them in Online media and their online articles.
The reason I tried to write on this topic as yesterday Barclay’s capital confirmed that they hit by a large loss trading copper and aluminium in the last financial year. For precarious reason Investments banks don’t disclose their earnings from the commodities division, may be trading raw materials such as oil, corn and gold makes up a relatively small portion of the revenues of most investment banks’ fixed-income divisions, the battle for market share in the sector has become intense as the financial crisis has hit other income streams such as credit derivatives. View full article »
This weekend financial media was concentrating on the credit event of Greece.Greece has officially defaulted on its debt to private lenders. It was an “orderly” default, negotiated rather than simply announced. This formal default on about $100 billion triggered payment of $3 billion in credit-default swaps.
One of the washington post tried to revealed that Insurance and CDS are different, CDS should never be treated like insurance, as its Mandatory for the insurance company to make reserve against insurance that it has issued on the other hand Credit Default swaps (CDS) is naked gambling. View full article »
I would like to dedicate today’s post to Rahul Dravid but the time is constraint will write for him soon :- I just don’t like that he is retiring, and people are talking about Sachin tendulkar! The Tragedy of his Life. Few more thing for him If Sachin Tendulkar was the Best thing to happen to Indian Cricket :Rahul Dravid was the Best thing to happen to Sachin tendulkar. ( I think that describes all for him)
The post is for my juniors, who wanted to have few jargon’s simplifications here you go :-
LEASE -BACK : Its an arrangement under which a company, in order to raise cash, sells a piece of equipment, ‘ land, or building on condition. that the buyer will lease it back to the seller for an agreed rental for a fixed term.
LEVERAGED BUYOUT : Taking over a company, using borrowed funds.
LEVERAGED COMPANY : If a company with borrowed funds in its capital structure. if the debt component is more than a third of the capitalization it’s called a highly leveraged company. View full article »
Yesterday was going through a case on the art auction valuation under matters of pinion an article in Economist,where the UK
High court has passed the judgement against Sotheby’s the leading art auction house where Lord Coleridge claimed that the auction-house expert, Elizabeth Mitchell, was negligent when she gave an auction valuation of a treasured family heirloom. The historic gold chain of office had been in his family for generations, and the Coleridge’s (distant relatives of the poet Samuel Taylor Coleridge) believed it dated from the mid-16th century. Lord Coleridge had expected that the estimate for his rare Tudor jewel would be £500,000 or more. Ms Mitchell, however, proposed that it was from the late 17th century, and gave it an estimate of £25,000 to £35,000. This, Lord Coleridge claimed, had cost him a good deal of money. He sued for £415,000, the case is interesting and bit difficult to understand Caveat Vendor
Here are some thoughts on the why Art as an alternative Investment has become so popular and its bit complicate to understand the market, the auction houses and the pricing, View full article »
International Swaps and Derivatives Association is the body corporate to make over the counter (OTC) derivatives market safe and efficient.
It has 815 members from 58 countries including global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouse and other service providers.
The Key areas of ISDA are
* Reducing counterparty risk
* Increasing the Transparency
* Improve the OTC operational infrastructure.
The details are provided on the ISDA Brochure
Recently ISDA came under criticism on its decision that based on current evidence the Greek bailout would not prompt payments on the (CDS)credit default swaps. View full article »