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	<title>Comments on: Some of my best friends are bankers</title>
	<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/</link>
	<description>FT Alphaville from FT.com</description>
	<copyright>Copyright The Financial Times Ltd 2006. "Alphaville", "FT" and "Financial Times" are trademarks of the Financial Times.</copyright>
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	<pubDate>Mon, 13 Oct 2008 06:11:55 +0000</pubDate>
	<lastBuildDate>Mon, 13 Oct 2008 06:11:55 +0000</lastBuildDate>
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		<title>by: Christmas is Over and Banking is Banking &#124; Prince of Wall Street</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-11352</link>
		<pubDate>Thu, 24 Jan 2008 21:10:51 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-11352</guid>
					<description><![CDATA[[...] FT Alphaville "Some of My Best Friends are Bankers" - January 18, 2008 [...]]]></description>
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		<title>by: Tim Price</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10803</link>
		<pubDate>Sat, 19 Jan 2008 07:47:26 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10803</guid>
					<description><![CDATA[Fine, but if footballers don't do their job properly, they merely disappoint their fans. They don't break the real economy.]]></description>
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		<title>by: Boz</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10786</link>
		<pubDate>Fri, 18 Jan 2008 17:43:57 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10786</guid>
					<description><![CDATA[Gentlemen

Two very interesting points of view. Both sides accusing each other of extremism and there is some truth in that. Like too many things in life the truth lies somewhere in the middle. What happened and how; there are many versions of that. In some cases, I believe, even the bankers who were creating such fairy tale CDOs had no clue what on earth they are selling. If it looks good, and everyone else is in the party and as Chuck Prince suggested 'dancing' then why get left behind. So one slightly less intelligent banker sold another one with the similar mental capacity a product. The professional institutional buyer who bought that product got insurance from a seemingly decent AAA grade monoline to protect him against the risk. Everyone in the Western banking world seemingly ended up playing that game, some to a lesser extent, since it was very enticing and very very rewarding indeed. Banks risk department filled with mere mortals with cynical minds who can not dare to disagree with the star banker on the risk or shoddy risk protection purchased to fill the files.

The problem with the above is that everyone thought this 24/7 money making scheme is a going concern, pretty much like other secondary markets aka stock exchanges.  If we think for a second what will happen if all buyers pull out of any of our stock markets, the twenty times P/E ratio valuation will evaporate into thin air and all our confidence will go to the deepest ditch. But stock exchanges work because majority of the instruments they are trading has some value and underlying activity which created profits. Unfortunately that can not be said about CDO or CDO of CDOs etc.

Sometimes we just give too much credit to bankers for being smart. My experience has been quite the contrary. Intellectually there is not much difference between Mr Alchemist Banker and Mr Chav Bling Bling. Both would like to earn through any means, and then spent that money to buy strange looking designer goods or collector items they rarely appreciate (the boom in the crappy modern art prices is a very good example of this).

Like footballers, this class of post teen adrenaline rushed youngsters has been paid immense amount of money since they are appreciated in their own world (banking – all ordinary bankers in branches are paid just a salary and nothing more) for the marvels they can achieve; mainly creating value from nothing. Alas in the last twenty years or so majority of the Alchemists hired created fake pieces of paper worth nothing and swindled and destroyed the very banks they were suppose to take to the new  heights of  monetary greatness.]]></description>
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		<title>by: Tim Price</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10781</link>
		<pubDate>Fri, 18 Jan 2008 16:19:13 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10781</guid>
					<description><![CDATA[Yes, in the interests of brevity I may have conflated a number of comparably guilty parties. But I challenge your analogy of chauffeurs and passengers. That analogy only works if the chauffeur also built the car, and had every interest in offloading it without maintaining any responsibility for its wheels subsequently falling off and it bursting into flames. The days of 'originate and distribute' certainly seem numbered, but then the days of quasi-monopolist ratings agencies conniving with Wall Street seem numbered too. And since many of the ultimate holders of crappy debt are less sophisticated institutions (local authorities and public fund pools, for example) - the word is "mis-selling" - the resultant litigation is shaping up to be way higher than the $10bn Danegeld forked over by Wall Street to salve the egos of, yes, naive and greedy investors who bought into dotcom fairy dust. We don't need to speculate as to what happens when transactional finance and leverage are allowed to metastasize unchecked because we're living with the aftermath already. The problem I have with Wall Street interests is that individual executives reap huge rewards out of all compass during the boom years, and in the bust years the poor old taxpayer, who was never a stakeholder, gets to pick up the tab. That isn't capitalism, but a particularly tawdry version of socialism for the rich.]]></description>
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		<title>by: The Epicurean Dealmaker</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10778</link>
		<pubDate>Fri, 18 Jan 2008 13:46:57 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10778</guid>
					<description><![CDATA[Mr. Price -- Surely, mistakes have been made.  I can guarantee you that some of them were made by bankers, of whatever stripe, and some of those mistakes were indeed not honest ones.  As an investment banker myself, I say hunt the evildoers down and gut them like fish.  The health and reputation of my business--like that of any other--depends on regular weeding of the garden.

However, what continues to irritate me is that the jumping and yelling and fingerpointing to date all seems to be directed at bankers, and I detect no difference in your comment.  Do not forget that, yes, the chauffeur drives the limousine, but the passenger in the back tells him where he wants to go.  It was the willful ignorance, greed, and practiced stupidity of legions of so-called professional investors--who appeared to unlearn everything they ever learned about the connection between risk and return--that created the demand for the products which are now blowing up in all our faces.  They are not the only ones culpable: ratings agencies, central banks, and--yes--even investment bankers all played their part.  But they were central.

The current kerfuffle is playing out just like the dot-com bust, with investors scrambling eagerly to assign blame anywhere but at their own doorstep.  Politicians, being what they are, cannot help themselves but join the scramble and milk this witch hunt for all it's worth.  What I find despicable is that this time it is supposedly professional investors who are joining in and even leading the charge.  Shame, Mr. Price, shame.

Never forget:  Bulls get rich.  Bears get rich.  Pigs get slaughtered.

Sounds like the knacker's van is pulling up the driveway.]]></description>
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		<title>by: Tim Price</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10733</link>
		<pubDate>Fri, 18 Jan 2008 10:21:47 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10733</guid>
					<description><![CDATA[A wise investor recently reminded me: never forget the ability of politicians to do extraordinary things to save their own hides. Anyone who read yesterday's WSJ will have seen the lead article, "Financiers' pay incentives add to global financial crisis". More to the point, they will have seen the letter sent to Stan O'Neal, 'Chuck' Prince and Angelo Mozilo from Henry Waxman of the House Committee on Oversight and Government Reform. It contains the following language:

"You should plan to address how (your pay package) aligns with the interests of.. shareholders and whether this level of compensation is justified in light of your company's recent performance and its role in the national mortgage crisis."

It just isn't good enough to say let the market work these things out for themselves. Wall Street and City executives, and ratings agencies, have turned a blind eye to venal revenue generation at the expense of the long term stability of the entire credit and banking process. Bond traders and salespeople shouldn't get to wreck the banking system and the real economy in pursuit of the next bonus payment. The implosion of the credit bubble has real world impacts - on investors, on consumers, on homeowners. If banks want to retain their privileged position at the centre of the modern economy they're going to have to rein in the more unfettered tendencies of some of their greedier and self-interested staff, or at least align their interests with shareholders over the longer term.

Taxpayers have a genuine grievance here. The forces of protectionism, socialism and regulation are all enjoying a secular tailwind thanks to Wall Street's uncanny ability to poison all wells.]]></description>
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		<title>by: Boz</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10721</link>
		<pubDate>Thu, 17 Jan 2008 18:05:53 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10721</guid>
					<description><![CDATA[I have thoroughly enjoyed the article, the posting and the comments. Brilliant!

The only sad thing is nothing is going to happen. I am quite young but already have seen dot com bubble bursting, asian crisis, stock market crashes and now subprime woes, and I have to admit that Masters of the Universe (aka investment bankers) had lot to do with them. Recently I saw an article where an ace dot com era investment banker was 'not found guilty' of losing billions and then also walked off with an additional $100 million cheque from the investment bank he had to leave because of these allegations.

I look forward to see FSA or SEC response to this. Chances are that we will never hear from them - who are FSA current bosses, any city links I wonder :-).]]></description>
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		<title>by: pegnu</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10607</link>
		<pubDate>Thu, 17 Jan 2008 00:39:33 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10607</guid>
					<description><![CDATA[oh nonsense.  People give money to banks to look after it - not to lend out to any old idiot with no prospect of it ever being paid back.

Banks aren't supposed to lose huge amounts of money!  How can a bank fail to make money unless it has been extraordinarily incompetent.

Anyone can lose money by handing it out to fraudsters.  Most of us assumed that robbing a bank was a bit more difficult.  Furthermore, the whole system of securitization encouraged this behaviour for the short term gains.]]></description>
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		<title>by: crookery.blogspot.com</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10606</link>
		<pubDate>Wed, 16 Jan 2008 18:47:47 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10606</guid>
					<description><![CDATA[Here's another couple of  Martin Wolf quotes from an earlier article

<i> "Those who borrowed the money to buy houses may, however, be deemed innocents. Whether this applies to people who exaggerated their earnings in applying for loans is an open question." </i>

and

<i>It took foolish borrowers, foolish investors and clever intermediaries, who persuaded the former to borrow what they could not afford and the latter to invest in what they did not understand.</i>

Rightio.  It's an "open question" whether plainly fraudulent borrowers are innocents, and we should be attacking bankers pay because their investors are dumb.  Is that it?  Really?]]></description>
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		<title>by: Peter Caritato</title>
		<link>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10605</link>
		<pubDate>Wed, 16 Jan 2008 18:28:55 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/01/16/10216/some-of-my-best-friends-are-bankers/#comment-10605</guid>
					<description><![CDATA[Epicurean writes:
"2) Since when in bloody hell are the intermediaries in any financial system supposed to tell investors "they couldn't have these [high] returns without taking on substantial additional risks," as you say? Are we supposed to assume that every institutional investor out there is completely ignorant about the absolutely primary, fundamental fact about financial markets: that risk is inextricably entwined with return?"

Let us be specific. For example, the Postal Savings Fund of Greece is now asking Citi Global Markets for compensation, regarding a 40 million Euro structured bond which it bought in 2005, which is now worth 4 million, according to today's "Ta Nea" newspaper.

So what have we here? A high-powered team of bankers - their very name a guarantee - convinced a savings bank to put the deposits it collects in one of their structured bonds, and thus gain about 2-3 percent above the market rate, for an "inextricably entwined" downside risk of about 90 percent.]]></description>
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