Sub-prime Meltdown Hits Thailand With Force

[thaigene2]

She said current short-term inflows are still needed to be controlled as the sub-prime crisis will curb down US dollar value. The baht will be continually boosted by the country's trade surpluses and capital inflows, she said.

First time, she says something that makes sense (and that is the truth).

So to summarize : the BOT thinks officially that the USD will continue to go down versus THB. But meanwhile, asks the thai exporters to not dump their USD... And meanwhile, continues to buy USD on the local market, to manipulate the exchange rate, (sorry to "intervene"), and increasing strongly its foreign currency reserve.

Well done Tarisa. You are a winner.

It's the perfect thai "coherence" at work.

It's not how smart you are (she is/isn;t), it's who you're family is and where they sent you to school! But we're being too tough on Thailand's economists, look at Britain's! Same-same - only the establishment kids and their private ("public") schools. What were the guys at Barings doing that day?

[plachon]

She said current short-term inflows are still needed to be controlled as the sub-prime crisis will curb down US dollar value. The baht will be continually boosted by the country's trade surpluses and capital inflows, she said.

First time, she says something that makes sense (and that is the truth).

So to summarize : the BOT thinks officially that the USD will continue to go down versus THB. But meanwhile, asks the thai exporters to not dump their USD... And meanwhile, continues to buy USD on the local market, to manipulate the exchange rate, (sorry to "intervene"), and increasing strongly its foreign currency reserve.

Well done Tarisa. You are a winner.

It's the perfect thai "coherence" at work.

It's not how smart you are (she is/isn;t), it's who you're family is and where they sent you to school! But we're being too tough on Thailand's economists, look at Britain's! Same-same - only the establishment kids and their private ("public") schools. What were the guys at Barings doing that day?

You referring to Nic Leeson? Straight out of an Essex comprehensive school I believe. I'd also say that there are far fewer public school educated people working in the City these days than state school grads. Old school tie may get you in certain London clubs and a few exclusive shoots, but it won't get you far as an economist or financial analyst these days I'd guess.

More to the point and relevant to the present, what were the guys at Northern Rock doing when they were giving out sub-prime mortgages to anything that moved and said "gimme a loan!" ??

[thaigene2]

She said current short-term inflows are still needed to be controlled as the sub-prime crisis will curb down US dollar value. The baht will be continually boosted by the country's trade surpluses and capital inflows, she said.

First time, she says something that makes sense (and that is the truth).

So to summarize : the BOT thinks officially that the USD will continue to go down versus THB. But meanwhile, asks the thai exporters to not dump their USD... And meanwhile, continues to buy USD on the local market, to manipulate the exchange rate, (sorry to "intervene"), and increasing strongly its foreign currency reserve.

Well done Tarisa. You are a winner.

It's the perfect thai "coherence" at work.

It's not how smart you are (she is/isn;t), it's who you're family is and where they sent you to school! But we're being too tough on Thailand's economists, look at Britain's! Same-same - only the establishment kids and their private ("public") schools. What were the guys at Barings doing that day?

You referring to Nic Leeson? Straight out of an Essex comprehensive school I believe. I'd also say that there are far fewer public school educated people working in the City these days than state school grads. Old school tie may get you in certain London clubs and a few exclusive shoots, but it won't get you far as an economist or financial analyst these days I'd guess.

More to the point and relevant to the present, what were the guys at Northern Rock doing when they were giving out sub-prime mortgages to anything that moved and said "gimme a loan!" ??

Sorry you missed my point - not clear perhaps. Nic Leason swanned circles around the old school ties, precisely because they had the jobs due to old school tie and not ability..like his.

[A_Traveller]

Nonsense, Leeson, who was pretty useless, had an OK trading record, and unwisely was put in charge of Singapore. Critically, he was given both front office {trading} and back office {settlement} responsibilities. This opened the door to his ability to create a fictitious account in which he hid his failures, whilst his successes were presented as all he did. This created the myth of his performance, and whilst it is true that compliance from London should have insisted on proper reconciliation methods, there was a tendency to not rock the boat given his apparent activity. What no one suspected, even those who saw him day after day in Singapore, was that he simply cooking the books.

In this situation, when a key member staff is lying, in his case on a day to day basis, it's difficult for any management to catch them without the appropriate mechanisms in place. The Bearing's attitude when it all went south, over the weekend is another matter though. The did expect to be bailed out {this after all was a second time for this 'revered firm'}, but BoE wasn't playing, since it did not view the issues as systemic.

Regards

[A_Traveller]

Perspective Time perhaps?

January 22, 2008 New York Times

If Everyone's Finger-Pointing, Who's to Blame? By VIKAS BAJAJ

Everyone wants to know who is to blame for the losses paining Wall Street and homeowners. The answer, it seems, is someone else.

A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone. The legal and regulatory wrangles could dwarf the ones that followed the technology stock bust and the Enron and WorldCom debacles. But the size and complexity of the modern mortgage market will make untangling the latest mess even trickier. Some cases stretch across continents. Others are likely to involve state and federal regulators. "It will be a multiring circus," said Joseph A. Grundfest, a professor of law and business and co-director of the Rock Center for Corporate Governance at Stanford. "This particular species of litigation will be manifest in many different types of lawsuits in many different jurisdictions."

The legal battles stretch from Main Street to Wall Street and beyond. Homeowners and subprime mortgage lenders are squaring off in scores of cases that claim some lenders engaged in predatory lending practices and other wrongdoing. Cleveland and Baltimore are pursuing cases against Wall Street banks, saying local residents are suffering because the banks fostered the proliferation of high-risk home loans. Two questions lie at the heart of many of the cases. The first is whether lenders and investment banks alerted borrowers and investors to the risks posed by subprime loans or securities backed by them. The second is how much they were legally obliged to disclose. "Those are the two issues that are frequently raised," said Jayant W. Tambe, a partner at the law firm Jones Day.

As defaults and foreclosures rise, the various players in the housing market are all pointing fingers at each other. State prosecutors like Andrew M. Cuomo, the attorney general of New York, are investigating whether investment banks that packaged mortgages into securities disclosed the risks to investors and credit ratings agencies. Investment banks, in turn, are accusing lenders and mortgage brokers of shoddy business practices. "What strikes me here is that this a tainted system from A to Z," said Tamar Frankel, a law professor at Boston University. "Everybody blames everybody else. If you look at what is being said, there isn't one who doesn't blame another and there is half-truth in everything."

Wall Street banks that sold mortgage investments around the world face legal complaints from as far away as Australia and Norway. Lehman Brothers, the Wall Street bank with the biggest mortgage business, is being sued by towns in Australia that say a division of the firm improperly sold them risky mortgage-linked investments. Lehman has denied the charges and has said the unit, formerly known as Grange Securities, acted properly.

Closer to home, members of a New Jersey family have sued Lehman for $4.14 billion, saying the firm steered them into complex securities that have become difficult to sell, Bloomberg News reported Friday. Lehman denied the accusations.

In the United States, Lehman is suing at least six mortgage lenders and brokers like Fremont Investment and Loan and the Fieldstone Investment Corporation, claiming they sold Lehman dubious loans. Lehman claims that borrowers' incomes were overstated, appraisals were inflated and the homes were in poor condition. In most cases, the lenders are fighting the allegations and Lehman's demand that they buy back defaulted or otherwise problematic loans. In another case, the PMI Group, a mortgage insurer, sued WMC Mortgage, a subprime lender that has stopped making loans, and its corporate parent, General Electric, in California Superior Court. PMI is trying to force the companies to buy back or replace loans that the firm was hired to insure and that it says were made fraudulently or in violation of the standards that the lender said it was using. According to the lawsuit, a review of loans found "a systemic failure by WMC to apply sound underwriting standards and practices." Reviewing a sample of the nearly 5,000 loans in the pool, Clayton, a consultant that reviews mortgage loans, identified 120 "defective" loans for which borrowers' incomes and employment were incorrect or where the borrower's intention to live in the home was incorrect. WMC offered to buy back 14 loans, according to the lawsuit.

Some of the loans have defaulted, and a trustee's report on the pool of loans packaged and underwritten by UBS, the Swiss investment bank, shows that losses on some defaulted mortgages are as high as 100 percent. As of November, about 27 percent of the loans in the pool were either delinquent 60 days or more, in foreclosure or had resulted in a repossessed home. PMI is on the hook for losses on defaulted loans, lost interest and principal payments to investors who own a $29.6 million slice of bonds backed by the mortgages. A senior vice president at PMI, Glenn Corso, said he was unsure how much the company had paid out so far. A spokesman for G.E., Robert Rendine, declined to comment, citing the pending litigation.

Securities lawyers say cases involving mortgage-backed securities, which were generally sold privately to sophisticated institutional investors, are far more complicated than those involving stocks, which were sold publicly to everyday investors. Class-action lawsuits, a favorite tool of plaintiffs' attorneys, will be employed less than they were after the plunge in technology stocks a few years ago because mortgage securities tend to vary in composition and disclosure. "This is going to be much more complicated to prove, and it's going to be case by case as opposed to class-actions," said David J. Grais, who is a partner at the Grais & Ellsworth law firm in New York and an author of a recent paper on the legal liabilities of credit ratings firms. "This resembles the S&L crisis in the '80s much more than it does the tech bubble in the '90s." Class-action filings spiked earlier this decade, jumping to 497 in 2001, from 215 the year before, according to Cornerstone Research, which compiles the figures in cooperation with the Stanford Law School. As those suits were resolved, new filings fell to a low of 118 in 2006. But as of mid-December, filings had jumped to 169, with about 32 of the cases related to the mortgage crisis.

Through the end of 2006, settlements in technology- and telecommunications-related class-action suits brought by shareholders totaled $15.4 billion, with more than a third of that coming from one company, WorldCom, according to Cornerstone. Settlements in Enron-related cases have totaled about $7.2 billion so far; the figure does not include Securities and Exchange Commission fines and settlements. Bringing securities fraud cases has been made harder by recent Supreme Court decisions that favored Wall Street, companies and professionals like accountants. The court ruled earlier this month that two technology vendors could not be held liable for taking part in a scheme designed by a cable company to inflate its revenue. Last summer, in a ruling favoring the company, Tellabs, the court said that securities cases could be dismissed if investors did not show "cogent and compelling" evidence of intent to defraud.

Some plaintiffs are using other legal avenues like the pension law, the Employment Retirement Income Security Act. Under that law, managers who handle pension funds must act in the fiduciary interest of their clients. State Street Global Advisors, which manages pension money, has set aside $618 million to settle claims that the firm invested in risky mortgage-related securities. Some legal experts say that the recent Supreme Court decisions, which are largely based on cases bought by shareholders, may not have much bearing on the more complex cases that stem from securitization of mortgages. "There will be a whole new set of claims that deal with the unique nature of the securitization market," Mr. Tambe of Jones Day said. "There will have to be new decisions that deal with those claims and a learning process for the bar and judiciary in those cases."

New York Times

Regards

Edited January 22, 2008 by A_Traveller

[thaigene2]

Nonsense, Leeson, who was pretty useless, had an OK trading record, and unwisely was put in charge of Singapore. Critically, he was given both front office {trading} and back office {settlement} responsibilities. This opened the door to his ability to create a fictitious account in which he hid his failures, whilst his successes were presented as all he did. This created the myth of his performance, and whilst it is true that compliance from London should have insisted on proper reconciliation methods, there was a tendency to not rock the boat given his apparent activity. What no one suspected, even those who saw him day after day in Singapore, was that he simply cooking the books.

In this situation, when a key member staff is lying, in his case on a day to day basis, it's difficult for any management to catch them without the appropriate mechanisms in place. The Bearing's attitude when it all went south, over the weekend is another matter though. The did expect to be bailed out {this after all was a second time for this 'revered firm'}, but BoE wasn't playing, since it did not view the issues as systemic.

Regards

HMM.. But if you're in the biz of making money, and you have all these 'public school educated' guys why not hire them to do that job? Why a barrow boy?

[thaigene2]

Nonsense, Leeson, who was pretty useless, had an OK trading record, and unwisely was put in charge of Singapore. Critically, he was given both front office {trading} and back office {settlement} responsibilities. This opened the door to his ability to create a fictitious account in which he hid his failures, whilst his successes were presented as all he did. This created the myth of his performance, and whilst it is true that compliance from London should have insisted on proper reconciliation methods, there was a tendency to not rock the boat given his apparent activity. What no one suspected, even those who saw him day after day in Singapore, was that he simply cooking the books.

In this situation, when a key member staff is lying, in his case on a day to day basis, it's difficult for any management to catch them without the appropriate mechanisms in place. The Bearing's attitude when it all went south, over the weekend is another matter though. The did expect to be bailed out {this after all was a second time for this 'revered firm'}, but BoE wasn't playing, since it did not view the issues as systemic.

Regards

HMM.. But if you're in the biz of making money, and you have all these 'public school educated' guys why not hire them to do that job? Why a barrow boy?

And -- look what's headlining BBC Online right now? Another rogue trader this time at France's Societe Generale. The link in a second - but relating to my question above, and the dismissives of some, if these places are awash in tim-nice-but-dim hi-so MBA types, then why does this keep happening? Wasn't leeson like TEN years ago? Shouldn't Harvard Biz School and LSE etc have a Nick Leeson Class for 30 credits?

http://news.bbc.co.uk/2/hi/business/7206270.stm

Edited January 24, 2008 by thaigene2

[Jai Dee]

Dollar Hits New Multi-month Low Of 33.0450 Against Thai Baht

The US dollar edged down against the Thai Baht in early Asian trading on Tuesday. Moving down from yesterday's close of 33.06, the pair touched 33.0450 by about 10:35 pm ET. This set a new multi-month low for the pair.

Source: NASDAQ - 29 January 2008

[Jai Dee]

EXIM chairman expects sub-prime damage to reach $400 billion

Export-Import Bank of Thailand chairman Narongchai Akrasanee on Monday estimated that damage caused by the sub-prime motgage lending crisis in the United States would reach US$400 billion and advised Thailand's business sector to adjust itself aggressively and hedge against currency exchange risks.

He said the global economy would be definitely affected by the sub-prime mortgage crisis, which is expected to cause damage in the range of $200-400 billion.

The International Monetary Fund projected the world economy would grow 4.8 per cent this year while the World Bank forecast it would expand only 3.3 per cent.

The bank expected the US economy would grow only 1.9 per cent and the global trade and financial activities would shift from the US, Europe and Japan into China, India and ASEAN.

Because of this, he viewed the business sector needs to adjust itself in an aggressive manner and protect itself by hedging against the currency exchange risks.

Mr. Narongchai reported EXIM Bank had net profits of Bt505 million in 2007, which is higher than targeted earlier. Its non-performing loans stood at Bt2.9 billion or 5.5 per cent of the outstanding loans, down from Bt7.93 billion the year before.

Source: TNA - 29 January 2008

[LaoPo]

FBI probes 14 firms in subprime crackdown

WASHINGTON (Reuters) - The FBI has opened investigations into 14 corporations as part of a crackdown on improper subprime lending, agency officials said on Tuesday.

FBI officials told reporters the probes involved potential violations including accounting fraud and insider trading.

They did not identify the companies, but said the probes reached across the industry to include developers, subprime lenders, companies that securitized loans and investment banks that held them.

The cases could lead to potential civil or criminal charges, the officials said.

The FBI said it was investigating the cases with the U.S. Securities and Exchange Commission, which has opened about three dozen investigations into the subprime market collapse.

Targets of the SEC probe include Swiss bank UBS AG and U.S investment banks Morgan Stanley, Merrill Lynch, Bear Stearns, as well as bond insurer MBIA. It was not clear whether any of these companies were involved in the FBI investigation.

The SEC, which has formed an internal subprime mortgage task force, is looking at how financial firms priced mortgage-based securities and whether they should have told investors earlier about the declining value of those securities.

(Additional reporting by Karey Wutkowski, reporting by Randall Mikkelsen, editing by Jackie Frank)

http://www.reuters.com/article/businessNew...sinessafternoon

I wonder if the US really wants to open the stinking slurry pit...

BUT, one never knows since there's still hope:

Bayou ex-CFO sentenced to 20 years prison

NEW YORK (Reuters) - The former chief financial officer of defunct hedge fund Bayou Group was sentenced to 20 years in prison on Tuesday for his role in a scheme that cheated investors of more than $400 million.

and:

Former Adelphia Communications Corp finance chief Timothy Rigas is serving a 20-year prison term, former WorldCom Chief Executive Bernard Ebbers got 25 years, and former Enron CEO Jeffrey Skilling got 24 years -- all higher-profile cases.

Continues here:

http://www.reuters.com/article/businessNew...oon&sp=true

LaoPo

Edited January 29, 2008 by LaoPo

[LaoPo]

EU leaders call for transparency -of financial institutions-

The leaders of Europe's biggest economies have called on financial institutions to improve transparency in all their activities.

UK Prime Minister Gordon Brown met his French, German and Italian counterparts at Downing Street to discuss the recent global market turmoil.

The leaders also called on the IMF and other bodies to monitor risks better.

If the finance industry did not address their concerns, they said they would consider imposing regulatory measures.

"We need a better early warning system for the global economy," Mr Brown told reporters.

"We want the prompt and full disclosure of the write-offs that are now to take place as soon as possible; I think these are the immediate things people want to be done," Mr Brown said.

Banks have been reporting massive losses related to risky investments in the ailing US housing market.

Mr Brown said credit rating agencies, that assess the risks of financial instruments, needed to increase investors' understanding of complex products.

Rapid action

Mr Brown met German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Romano Prodi.

"We want the kind of capitalism that promotes entrepreneurship not speculation," said Mr Sarkozy afterwards.

"We can't let this lack of transparency jeopardise growth."

European Commission President Jose Manuel Barroso also attended the discussion.

The leaders said in a statement that if financial institutions did not rapidly address their concerns, they were ready to introduce rules and regulations as an alternative to "market-led solutions".

Ms Merkel said that the lack of openness about the activities of some financial institutions had eroded trust and could led to a rise in protectionism.

"We need to have more transparency on the valuation of these new, very complex financial instruments," said Ms Merkel.

Cooperation key

Earlier on Tuesday, Chancellor Alistair Darling told BBC News that cooperation was key to preventing an economic slowdown intensifying.

"With the combination of the right regulatory response and the right economic response, I am confident that we will get through these difficulties and will continue to see growth."

Consumer confidence is deteriorating across Europe as stock markets plummet and the Societe Generale rogue trader scandal makes headlines.

And the US economy, a major destination for European exports, could be headed for a recession, some economists say.

The talks come before finance chiefs from G8 nations meet in Japan in February.

http://news.bbc.co.uk/2/hi/business/7215873.stm

LaoPo

[LaoPo]

It seems there could be some more surprises in the pipeline...pre-opening (Japan) message:

"....UBS AG predicted global financial companies may have losses of at least $600 billion from the collapse of U.S. subprime mortgages."

Asia Stock Futures Drop as UBS Predicts More Losses for Markets

By Masaki Kondo

March 3 (Bloomberg) -- Asia's stock index futures fell after UBS AG predicted global financial companies may have losses of at least $600 billion from the collapse of U.S. subprime mortgages.

U.S.-traded receipts of Mizuho Financial Group Inc. retreated 4.7 percent from the closing share price in Tokyo on Feb. 29, while Westpac Banking Corp. lost 1.8 percent. Sony Corp. fell 3.6 percent after the yen strengthened against the dollar to a level not seen in more than three years, cutting the value of overseas earnings.

New Zealand's NZX 50 Index, Asia's first benchmark to begin trading, lost 47.54, or 1.3 percent, to 3,535.19 at 11:53 a.m. in Wellington. Australia's S&P/ASX 200 Index futures contract due in March slumped 2.6 percent to 5,420 at 7:59 a.m. in Sydney.

Nikkei 225 Stock Average futures expiring in March closed at 13,305 in Chicago, down from the close of 13,560 in Osaka and 13,580 in Singapore on Feb. 29.

``Japan's stock market will remain bearish as the U.S. economy is slowing'' and the yen is strengthening against the dollar, Mamoru Shimode, an equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television.

The Bank of New York Asia ADR Index, which tracks American depositary receipts of the region's companies, slid 3 percent.

http://www.bloomberg.com/apps/news?pid=206...r=world_indices

LaoPo