Minutes to win it...

Buying equity anticipating post-meeting minutes to reflect one or two words in the right order is just about as useful as learning to balance 5 ping-pong balls on your nose. Failing to appreciate that the odds are stacked against the trade is similar to a bout of inconsolable hysteria after failing to bounce a dime into an open-necked bottle at 30 feet.

Hoping against hope that Germany will fund delinquent excess whilst Merkel teeters on the political abyss presumes that PIGS will fly in the middle of July..

There are some fearsome odds we seemingly ignore. $600 trillion approx. is the size of the global derivatives market. Romney vs Obama for the world's most important economy is a David vs David contest. Where's Goliath? Companies have retrenched, are retrenching and will continue to retrench extraordinarily large percentages of their work force. Consumer spending resilience under those conditions is probably ephemeral at best. Internal controls at the world's largest financial institutions are either lax or deliberately misleading. Global youth unemployment, the Arab spring and the Asian Tiger struck low with cat-flu virus are fairly strong signals that all is not well. When 27000 words of legislation regulate the planting of a cabbage, who can honestly claim surprise when the Europeans disagree to disagree?

If Buffett's form holds true, 'risk-on' is just around the corner; the music's stopped and the exit is jammed. Ping-pong anyone?

Anti-theft lunch bag fools the playground

Two little boys running mad
Rajoy & Monti; from spendthrift fame
Both little boys thoroughly bad
The rules they break, they play a game

Onto the playground they have run
To steal the lunch off Merkel's mum
Her lunch bag in hand and off they dash
Their celebrations, prematurely rash

The bag wide open, they see the mould
Back to Merkel they must scold
The bag's disguise in mould is sham
Under the plastic is good ham

Wrapped in court for many a week
Merkel's lunch is still her own
Rajoy & Monti will you moan
Off to class they must sneak

All Tuckered out

Paul Tucker's testimony to the Treasury Committee was either a masterclass in talking a lot & saying very little or confirmation that just about anybody, with the right 'connections', can ascend to the position of Bank of England deputy governor.  

Either way and what's difficult to comprehend is why someone in Tucker's position would volunteer and publicly affirm, indirectly perhaps, a level of incompetence unbecoming of his position. Even with the benefit of hindsight, it's still difficult to justify Tucker's contention that the BoE had little reason to suspect irregular behavior in the LIBOR market. Minuted evidence from meetings Tucker chaired does, in fact, suggest otherwise. His indefensible contention, when pressed by the committee to answer directly, that he might have 'misinterpreted the signs' as early as 2007, does little to alleviate the negative public opinion.

Whether Tucker's self-preservation instincts motivated a 'massage of the truth' or even if he failed to show up at the LIBOR free-for-all at all, there's little justification or evidence sufficient to restore the level of competence his position demands.   

Out of Ashes, An Opportunity!

The rate-fixing scandal is quite simply a systemic cultural failure. London burns and the ramifications are difficult to quantify. Even so, you cannot deny the gift-wrapped opportunity for the US. Opportune US regulators can now, at last, justify / demand or fix associated trade in US dollars. The expected shift in trading and jobs away from London to New York should, if nothing else, convince the global community that Europe's star has waned.

As for the individuals specifically implicated in the so-called rate-fixing scandal, whether they emanate out of Whitehall, the BOE or from the formal financial community only, there are a range of criminal sanctions and punitive guidelines covered by legislation. Deliberate attempts to rig or manipulate interest rates allow for little justification and although there is evidence of unsubstantiated mudslinging, the ramifications for the individuals so implicated, are dire.

In a remarkable quirk of timing, today's testimony by a US-born ex-CEO of a UK bank could denote a banking shift away from London to the US. Free at last?

Wishing our US friends a safe and Happy 4th of July. 

London loses its 'Global best practice' tag!

It's not surprising that Barclay's Diamond has resigned. Even so, further scrutiny and full disclosure could well vindicate or indeed confirm his fall from grace. Time will tell. What was a surprise was the reinstatement of Agius as Chairman. It's difficult to comprehend and cynically symptomatic of the financial services industry generally. Then again it would be wholly irresponsible for Barclay's to continue to function without both its CEO and Chairman.

Complicity or collusion is by definition inclusive of other parties which raises a number of important questions. Aside from the corrosive taint hanging over the UK's arcane banking and regulatory industries and the associated reputational risk to London's claim of 'global best practice', the threat to the UK's economic prospects cannot be discounted. Endemic complicity is never victimless. In practice, as a consequence, retail investor abuse is both systematic and common.

If complicity is confirmed, the 'Barclay's-event' mutates into an industry-wide issue which opens up the industry, rather than the company or the individual, to civil claim. The threat of a civil claim must, as a consequence, threaten the balance sheets of the banks involved. You could argue that the banks involved, protecting their cash reserves in fearful anticipation of a fine and or a general civil claim, might not be INCLINED to function appropriately in the retail lending markets. The stifling effect on an already unstable economy in desperate need of stimulus cannot be denied.

THIS IS NOT HOW YOU SUPPORT ECONOMIC GROWTH and or REPAIR the reputational damage to the global financial services industry post the events of 2008.

Shoddy mistreatment of clients & shareholders

It's time and past time to FIRE / DISMISS the executives who either directly or indirectly contribute to market manipulation in any or all its forms and who by virtue of their appointment only hold a mandate from shareholders / clients to exercise oversight with due care and vigilance. Accepting the resignations of these individuals offers an avenue of escape which avoids the social blight they clearly fear most. It's a tacit acceptance of flagrant misconduct and or blatant incompetence both disgraceful and an insult to the market and the service-ethos at large.

A Savile-row tailored suit and a disproportionately high wage does not absolve any individual from negligence, INTERBANK-COLLUSION, malfeasance, misconduct, incompetence or blatant stupidity!

By the way Diamond, Dimon and Agius, aside from your obligations prescribed under fiduciary duty, it's your job to exercise due care, oversight and control! It's time to institute an international civil claim against these (b)ankers directly.  

Murdoch, The Media & The Art of War

Success demands an understanding and practical application of the pian (chapters) proposed in Sun Tzu's 孫子兵法. Mr. Murdoch (herein after 'the Master') is obviously a studied practitioner of the Art.

1. Plan- Having been given a lengthy time to assess the allegations and apply due consideration, the Master has had the latitude / leeway to calculate his best chances of victory. 
2. The Challenge- the Master's successful campaign requires the limitation of  the cost of competition and conflict. Accepting personal blame limits further conflict / interrogation / discovery and deflects conflict away from the business. 
3. Attack by Stratagem- Powerful 'friends' pursuing personal interests openly support the Master, a definition of 'independent' opinion and the epitome of unity rather than defiance via legal strong-arm tactics pillared by limitless company funding.
4. Positioning- In the first hearing the Master defends & denies, successfully buying time to consider his options before advancing in relative safety (ie: for the Company). The Master has recognized and seized a strategic opportunity, deflated the "enemy's" contention through a process of self-imposed blame and squashed any further opportunities of attack - conflict averted.
5. Directing- Who can credit the Master's (hitherto bombastic and arrogant) creativity and timing  in shameful acquiescence of personal blame. By anyone's definition completely out of character.
6. Illusion and Reality- having diverted the conflict away from the Company by assuming personal blame, the Master creates the illusion of personally-imposed regulatory deviance rather than Company non-compliance. This cleverly engineered change of environment* provides the Company the legitimacy it doesn't necessarily deserve. (*Who will discredit the Master's intended illusion of Company-innocence given his undisputed history of interference. The Master's age wraps the illusion nicely for only an old dog loses the will to bite..)
7. Manoeuvering- the Master has understood the dangers to the Company and has avoided further conflict by interposing himself between the process of discovery and the Company. 
8. Variation in Tactics- the Master's flexibility and change of tactic from outright denial to an unexpected, unequivocal acceptance of personal blame is wholly successful. The Company remains intact.  
9. Moving The Force- the Master currently waits for the 'enemy's' next move. Any new allegations will be carefully evaluated and referred back to 'Planning' for response. 
10. The Use of Intelligence - the Master will CONTINUE to develop good sources of information / intelligence for, one reason and one reason only; Success depends upon it.

Global corporate management is full of artful deflection. Knowing why is the key to your own success...